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Score One for SMEs

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For the past few months, the term Brexit has acted as somewhat of a Bogeyman figure looming over many Irish business as the haze of uncertainty for what a British exit from the European Union would mean for Irish borders and trade with the UK, on which many companies rely. Perhaps the most concerning idea for Irish businesses would be what this would mean for Irish Small and Medium Enterprises (SMEs). We have spoken at length in the past about how important the SME sector is in Irish business, forming the backbone of our economy, and how vital it is to protect these types of businesses in changing times. Many Irish SMEs rely on business with the United Kingdom and so a cloud of uncertainty and insecurity has plagued the sector in recent months.

 

Recently, we have spoken about new funding opportunities coming to light for SMEs and this week it appears that the future may be beginning to look even brighter for these vital enterprises. The Minister for Employment and Small Business Pat Breen has urged SMEs and micro businesses to turn to their Local Enterprise Offices (LEO) for information about a range of supports now available to them. A newly announces suite of Brexit supports is now available to SMEs and microbusinesses through their Local Enterprise Offices which include

  • Access to the ‘Brexit SME Scorecard’ online tool where micro and smaller businesses can self-diagnose their readiness for Brexit – A vital planning tool which may assist many small businesses.
  • A ‘Technical Assistance for Micro-enterprises’ grant to help LEO clients to find new markets and exports.
  • Rollout of ‘Lean for Micro’ nationwide which will make small businesses more efficient and competitive.
  • A ‘LEO Innovation and Investment Fund’ pilot programme to support innovation in micro-enterprises and get them investor ready to scale their businesses.
  • Tailored mentoring to address Brexit related business challenges.
  • Training on specific Brexit challenges, including financial aspects.

As you can see from this list, these supports are specifically aimed at providing information and a framework of support and guidance for these businesses to utilise when navigating the uncertain times ahead. Minister Breen was quoted as saying of the support:

“I am delighted to announce this suite of important Brexit supports which will be available for small and medium enterprises. It is imperative that micro and small businesses have the tools and supports needed to navigate through what is uncharted territory. This is part of the Government’s Brexit planning and I am very pleased that my Department through Enterprise Ireland has been able to accelerate the rollout of these new LEO offerings worth up to €3.4 million, and I urge small and micro business owners to get in touch with their LEO to see how they can help.” 

These supports focus heavily on planning ahead which will be vital in the coming months for all businesses. Should you require further information, guidance or assistance please give us a call.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

VENTURE CAPITAL FUNDING

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Venture capital groups have become one of the most popular methods of gaining equity. This method has become so popular of late that Irish Venture Capital Companies have become one of the primary sources of funding for SME’s.

The purpose of venture capital groups is to provide equity to growing start-ups.  These groups may also act as a mentor of investment as they often provide essential advice to the companies in whom they invest as well as assisting in the expansion of the company.

 

It was reported in February of this year that Venture Capital Funding for SME’s had hit the 400m mark. This is the highest level of venture capital funding seen in over 10 years.  Over 80% of this money was dedicated to the expansion of existing companies. This growth in the popularity of venture capital funding has lead to growing confidence among Irish entrepreneurs.

 

Obtaining venture capital is very different from raising debt or a loan from a lender such as a bank and is an option that should be considered carefully. One of the ways in which this method of funding is unique is that instead of seeking security on their investment, lenders of venture capital will usually charge interest on the loan. Another way in which this option is different is that venture capital is invested in exchange for a stake in your company; creating a symbiotic relationship between the investor and the company they are investing in. The investor’s return is dependent on the profitability and growth of our business.

 

Recent research has shown that Venture Capital backed companies grow faster than other companies. Research has also shown that these companies are more profitable than their peers at a similar level. As well as injecting cash into the business, the investment is also likely to inject the start-up with credibility

 

So, is Venture Capital a viable option for your company?

Venture Capital is the best option for you if you are hoping to rapidly grow your company, and have the ability to protect your intellectual property throughout the investment period. In order to appeal to venture capital investors it also helps to have a USP (Unique Selling Point).

 

If you decide that Venture Capital Funding might be for you, you must ensure that your investor has a strong track record, excellent credentials, industry contacts that can help you grow your business and the time to invest in growing your company.

 

There are a wealth of venture capital funds available in Ireland at your disposal. For your convenience we have compiled a short list of those available:

 

  • AIB Seed Capital Fund
  • AIB Start-Up Accelerator Fund
  • Bank of Ireland Early Stage Equity Fund
  • Bank of Ireland Start-up and Emerging Sectors Equity Fund
  • SOS Ventures Ireland Fund
  • Frontline Ventures Fund
  • Delta Partners
  • Enterprise Equity

It is vital to choose the correct investor for your business, as your investors will be some of your most important contacts. Your venture capital provider should be able to provide advice and guidance as well as capital and it should be a relationship that will grow alongside your company.