Enterprise Ireland hopes fund will raise €700m this year

Enterprise Ireland hopes its large venture capital fund will have raised the €700 million it is seeking to invest in new and developing companies by the end of this year or early in 2015.

An update on the funds came as the State agency reported that companies it supports created 18,033 new jobs in 2013, resulting in the highest net jobs gain for Irish companies in the last decade – a total of 5,442. It attributed this primarily to the strong export performance of its client companies.

Enterprise Ireland-supported companies now account for more than 300,000 jobs in the Irish economy directly and indirectly – 16 per cent of the total workforce.

The State agency, whose primary role is to support homegrown businesses that are seeking to export their goods and services, last year announced that it plans to put €175 million into a venture capital fund and recruit private sector investors to provide a further €525 million and to manage the money.

Fund managers
In October, its board approved agreements with a number of fund managers that will see the agency committing a total of €99.5 million from the €175 million total for investment, on condition they provide three times that amount.

Before coming to similar arrangements regarding the remaining €75.5 million, the organisation will try to determine in which sectors the cash can be best employed.

Enterprise Ireland is hoping to complete this work and establish further partnerships with fund managers by the end of this year or in early 2015, at which point the process of investing the money can begin.

Last year it agreed a deal with MML Growth Capital Partners under which the agency committed €25 million while its partner put up €100 million. This money will be invested in Irish small- and medium-sized businesses.

MML has since hired Rory Quirke and Neil McGowan, both of whom have experience in the private equity industry, to identify suitable candidates for investment.

Limited partnerships
The money in these funds is invested and managed through limited partnerships. This means Enterprise Ireland invests the money, but its partners manage it and ultimately decide on where it should be invested.

Industry sources agree that this role should be entirely filled by the private sector, with no input from agencies such as Enterprise Ireland, but point out that State involvement in venture capital has become common across Europe over the last five to six years because what is on offer from private interests falls short of what is required.

The Enterprise Ireland seed and venture capital fund will invest in companies at various stages of their development, from the start-up level to second, third and further funding rounds.

The agency also operates a €21 million commercialisation fund to support the development of research and inventions from third-level colleges. Its partner, Highland Capital Partners, manages a €20 million pot for Irish companies in the technology sector.