Incubator for high-tech stars

It is really critical over the next three to five years that we build technology-based industries and we embed them here in Ireland…

It is really critical over the next three to five years that we build technology-based industries and we embed them here in Ireland

Housing is an issue that increasingly concerns Mr Michael Donnelly, the chief executive of Growcorp, the business incubation company that invests in and develops high-technology companies.

With the current price of housing, he says he would have to think deeply about advising somebody to return from abroad to work in Ireland, particularly Dublin. "I would have to sit back and say you really have to spend a few weeks here and really look at what the cost of living is here."

It may seem a strange comment from a man whose role it is to promote business in Ireland, but he says he has to be realistic. The cost of housing is becoming a barrier to attracting the kind of individuals this country needs to develop an indigenous high-tech sector, he says.

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"I think, ultimately, if it doesn't stabilise and a professional mid-career person can't afford a half-decent house for his family, then people will leave. We could end up having emigration for the wrong reasons."

Mr Donnelly should know what he is talking about. He is one of the thousands of Irish-born professionals who made the decision to return in the mid- to late-1990s.

He spent six years, from 1980 to 1986, with Air-Shields Vickers in Philadelphia as director of marketing and director of research and development.

From 1986 to 1996, he was professor of paediatrics at the College of Medicine, University of Cincinnati, Ohio, and director of bio-engineering research at the Perinatal Research Institute, also in Cincinnati.

He maintained an interest in the commercial sector, serving as vice-president of IEP Group in North Carolina from 1993 to 1996.

He returned full-time to the commercial sector in 1996 when he became vice-president and general manager of a medical products company in Cincinnati, before coming back to Ireland, with his wife and two daughters, to establish Growcorp in January 1999.

"If you were asking me the blunt question, if I wasn't living here, would I come back, I'd have to think about it because it has been a huge strain on my family," he says.

High house prices have other, less obvious drawbacks, according to Mr Donnelly.

"People are spending half a million or a million pounds on a house - a house that three to five years ago wouldn't have been worth a third of that. Wouldn't it have been wonderful if half a million of that money could have been put into start-up businesses?"

He also feels that the country is moving too slowly on infrastructural development, particularly roads.

Twenty years spent in industry and academia in the US have given Mr Donnelly a good perspective on how far Ireland has progressed in that time. A lack of finance rather than a lack of ideas has hindered the development of indigenous information and communication technology and bio-science industries here, he says.

"There are good ideas. The difficulty that we have had is that there has not been a huge amount of money available in Ireland to do what's called proof of principle - let's say you've got a good piece of technology, but you need another £150,000 - £200,000 to clearly show that this can be replicated or that a prototype can be developed. There hasn't been money available in the past for university and third-level based research to do that."

He is hoping that money coming from sources such as the Technology Foresight Fund and various campus companies' programmes will help rectify that.

"The universities and third levels here have always been turning out good quality work. But there wasn't an emphasis here with universities or third level to commercialise technology. Now each one has individuals who are interacting with the research community and looking at what's going on in terms of product potential and commercial potential in particular laboratories," he said.

Such moves are necessary in moving Ireland away from an over-reliance on a small number of multinationals, he said. Despite his belief that many Irish subsidiaries are leaner and run more efficiently than many of their parent companies, Mr Donnelly said they will not remain totally immune from the global decisions of these corporations.

"When some of these companies announce a 10 per cent or a 20 per cent decrease in their workforces, Ireland is going to take a hit also. So, it is really critical over the next three to five years that we build technology-based industries and we embed them here in Ireland," he said.

That is where Growcorp comes in. A business incubation company, it invests in and develops high-technology companies, with a particular focus on platform and enabling technologies, rather than merely applications of existing technology.

"We primarily are looking for businesses where there is some intellectual property and that property can be protected either by first-mover advantage or by some kind of a patent," said Mr Donnelly.

A comprehensive and penetrating business evaluation process is applied to all prospective clients, resulting in a robust business plan and a clear-cut programme of action, according to Mr Donnelly. Around 5-10 per cent of business propositions make it to incubation stage. So far, a total of 11 companies have been incubated at the 16,000 sq foot premises in the National Digital Park in Citywest in Dublin.

"Of the 11 businesses, five of them have been extremely successful. None of them have gone public yet. But in the current climate, it is unlikely any of them will go public this year. But they are all viable and they are funded significantly to develop the business. Of the remaining six, one failed and the other five are either on target or a little behind. They'll survive. So, I would say the overall track record has been relatively good."

Construction work is now well-advanced, which will allow Growcorp to double its space. Mr Donnelly said it is also hoping to deliver some of its teaching programmes to other locations via broadband and real-time video-conferencing.

Growcorp will also be responsible for running the new £5 million business academy - established and funded by Dr TonyRyan's three sons and located in the National Digital Park, next door to Growcorp - until a director is hired by the academy.

He has described the new academy as a "bootcamp" for entrepreneurs, where they will be able to quickly learn about different practical elements of business without having to enrol in lengthy courses based around an academic year.

But just when the money is becoming available for science and technology start-ups in Ireland, another potential threat looms on the horizon, according to Mr Donnelly - the fall-off in the number of second-level students studying science subjects and maths.

"The science community itself has not done a very good job in terms of presenting what the career opportunities are . . . what it's really like to be working in that type of environment. I know the Department of Education is trying to come up with programmes to encourage children to stay with sciences, but if they don't, we'll have a huge problem," he said.

Despite the many negatives he has encountered, Mr Donnelly says he is confident that changes and investments being put in place now will bear fruit in coming years, and that when his children grow up, they will not be faced with emigration.

"I would hope that my children stay in Ireland," he said. "I think a lot of negatives in terms of infrastructure deficits will be corrected by then."