Tech Investing: Ireland v Europe
by John Clark
If you’ve been in a room of entrepreneurs and start-up survivors, you’ll hear talk on anything from funding and burn rates, to bootstrapping and incubators; and if that’s enough for you to engage with them, you might get down to the specifics for why they chose a particular place to launch. This decision can be influenced by countless variables that might include government support, access to pre-seed and pre-revenue funding, market fit, talent access, and so on. So, how does Ireland rate?
A few years ago, Hubspot published a city-comparison naming Dublin as the most entrepreneurial tech city in Europe, against Amsterdam, Berlin, Paris, and London.
What does this mean? Well, according to the study, 72% of Dubliners are willing to take on risk and 96% believe the tech scene is growing. But when you drill down a little further Ireland, specifically Dublin, doesn’t rank that well against its European counterparts. For example, in 2015, early-stage funding in Amsterdam, Berlin, Paris, and London averaged €313m, but Dublin: €58m. Not terribly exciting.
Valuer.ai and Sifted paint a comparative picture, with 2019 findings that put Dublin 28/30, well behind Paris (9), Berlin (10), London (3), and Amsterdam (15) for best start-up ecosystems; and 35/50 for best start-up cities. This, behind Berlin, Helsinki, Stockholm, Zurich, Istanbul, and Madrid, to name a few.
Ireland has the resources to lead. The capital exists, co-working spaces are popping up all the time, incubators and accelerators seem to be growing; the talent pools, levels of education, and entrepreneurial mindsets are all prevalent. There are numerous PE and VC funds (though I wonder how many new funds are in existence), and fantastic government supports, especially for such a small population. Where the support is needed, however, is for pre-seed investment. There seems to be a preference for bricks-and-mortar businesses in the early stages, versus investing in what could possibly be ‘the next big thing’ in tech.
So, while to some Ireland may appear to have a thriving start-up scene, I think more will need to be done to ensure it grows and remains competitive. To do that, there needs to be a change in mindset and risk appetite for pre-seed and pre-revenue investments.
What do you think?