Business

Funding remains top challenge for start-ups and growing companies, survey finds

Most tech start-ups and growing companies plan to use AI or have already begun deploying it

Nick Ashmore, director of Ireland Strategic Investment Fund; Jenny Melia, executive director of Enterprise Ireland; Martina Fitzgerald, CEO, Scale Ireland; Adaire Fox-Martin, head of Google Ireland and president at Google Cloud; and Brian Caulfield, chair of Scale Ireland

Ciara O'Brien
Thu Feb 22 2024 - 19:07

Access to finance remains the biggest challenge facing Irish founders, a new survey has found, as the funding landscape remains difficult for companies. Adoption of artificial intelligence (AI) is also high among tech start-ups and growing companies, and companies are increasingly optimistic about the impact from new investment incentives.

The findings were part of the Scale Ireland 2024 State of Start-ups Survey, which questioned 340 tech start-up founders and chief executives.

According to the survey, half of chief executives said access to funding was their biggest challenge, with almost 80 per cent feeling it is difficult to attract capital, with the cost of doing business a distant second. The latter was higher at 16.2 per cent, up from 12 per cent a year earlier. Recruiting staff and retaining them was also a concern, along with lack of expert advice and support.

The report also found most tech start-ups and growing companies plan to use AI or have already begun deploying it, at 82 per cent. Some 83 per cent think AI will have a positive impact on their business, with almost half thinking it will increase productivity, and only 17 per cent believing that it can increase market growth.

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“Our findings are very clear on the potential of AI – the founders and CEOs of Irish tech start-up and scaling companies are embracing AI in a big way,” said Scale Ireland chief executive Martina Fitzgerald. “The vast majority of respondents are overwhelmingly positive about its potential, and believe it will have a big impact on their businesses.”

The majority – almost 80 per cent – think the increased R&D tax credit will be positive, along with 58 per cent backing the reduced capital gains tax rate for angel investors. However, almost two-thirds were unaware of new EU rules that reduce investor relief under the employment investment incentive scheme (EIIS), and 64 per cent are not availing of the R&D tax credit, with more than half saying it was complicated.

“The survey demonstrates the challenging investment landscape facing start-up and scaling companies and the need to attract more private investment into the sector,” said chair of Scale Ireland Brian Caulfield. “It also highlights the complexity of many State supports so this year’s consultation by Revenue to simplify such schemes is very welcome.”

The survey’s publication coincides with Scale Ireland’s third Regional Start-up Summit in Limerick. The start-up organisation’s event, which is supported by Google, the Ireland Strategic Investment Fund (ISIF), Enterprise Ireland and Atlantic Bridge, features regionally-based start-ups and scaling companies.

Ciara O'Brien

Ciara O'Brien

Ciara O'Brien is an Irish Times business and technology journalist

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