Dublin's case to become Europe's answer to Silicon Valley is 'come for the money and stay for the supports and networking' – and it's working, writes GORDON SMITH

WAS IT JUST a coincidence that the winners of two Irish technology start-up competitions in 2011 both originated from outside Ireland? Maybe, but in the same year that a €10 million fund was launched to attract international entrepreneurs to these shores, it starts to look like part of a bigger plan.

In December Adjuno, whose principals are from Canada and Bulgaria, won the National Digital Research Centre’s LaunchPad LiftOff award. May’s winner, B-Smark, was founded by Italians. Profitero, winner of the IBM SmartCamp competition in London last month, is headquartered in Dublin and was started by a team hailing from Belarus.

They and others like them are part of what’s hoped will be a wave of international technology companies choosing Ireland as their base of operations. The March 2010 Innovation Taskforce report expressly recommended proactive efforts to attract people to Ireland to start new companies.

Behind the usual government jargon about strengthening the innovation ecosystem, the issue is a simple one, says Chris Horn, co-founder of Iona Technologies who sat on the taskforce’s advisory panel. “It was primarily about numbers,” he confirms.

There isn’t enough entrepreneurial activity among Irish companies with the potential to create jobs, so new start-ups must be sourced from elsewhere. “Governments don’t create jobs, entrepreneurs do,” Horn adds.

The increased activity by foreign-owned start-ups isn’t exclusive to the technology sector. Horn chairs the judging panel for the David Manley Emerging Entrepreneur Awards run by the Dublin Chamber of Commerce, which has recently seen rising numbers of applicants from beyond Ireland.

Lorcan O’Sullivan, manager of Enterprise Ireland’s overseas entrepreneurship department, agrees with Horn to a point but says there is a further goal of adding international experience and perspective to create a richer indigenous start-up culture.

“While it’s a numbers game it’s not just that. I believe what we’re doing will start to build a start-up ecosystem. The places that are most successful are places where there is diversity,” says O’Sullivan.

He cites CoderDojo as an example of this effect in action. The non-profit scheme runs workshops to nurture programming talent among school students. It was started in Ireland by Australian serial entrepreneur Bill Liao and an Irish student, James Whelton.

“What you will see in the future is a mix of Irish and foreign people working on a start-up, and all other things being equal that has a greater chance of succeeding than one from a single country,” says O’Sullivan.

He points to the stipulation in the €10 million EI fund that company founders must be based in Ireland. “That wouldn’t matter if we didn’t have that additional objective in mind,” he says.

EI had set a target to have 10 per cent of high potential start-ups on its books originating from overseas by 2013. O’Sullivan says it has already reached this number.

The fund is open to entrepreneurs from any country, and EI emphasises the breadth of assistance that start-ups get by locating in Ireland. The message, roughly translated, is: come for the money, stay for the range of supports and networking.

Inevitably the 12.5 per cent corporation tax rate enters the conversation as the most compelling reason for technology companies to locate in Ireland, but B-Smark chief executive Nicola Farronato says this isn’t a factor for start-ups.

“When you have an early-stage company and you want to make innovation, you start from scratch. It takes you minimum six to 12 months before revenue – and that’s not going to have an impact on you for the first year,” he says.

Ireland’s business environment is favourable to start-ups, adds Profitero’s chief executive Volodymyr Pigrukh. “Entrepreneurs need very few things: they want to register their company and it’s very easy to do in Ireland. It took three days to register Profitero,” he says. Red tape is kept to a minimum and essentials, like office space, are available at low cost.

Farronato and Pigrukh say events like the Dublin Web Summit are putting the capital on the map internationally and creating a buzz around the city for tech start-ups. “For me, it’s the best place in Europe at this stage,” says Farronato.

Adds Pigrukh: “If Ireland becomes the easiest and the cheapest place to start a business in Europe, it’s going to bring a lot of entrepreneurs. Add to this networking, mentoring and seed level funding and Dublin has a good case to become a centre for entrepreneurship in Europe.”

Apparently the gospel is spreading among the international tech community. Pigrukh says he knows a software developer relocating from Singapore to Dublin for a tech venture, and others in London who are thinking of doing the same.

While venues like the NDRC, Mediacube and Dogpatch Labs are useful bases for early-stage companies carefully watching their cash reserves while in pre-launch mode, entrepreneurs will also make their decisions based on how easy it is to access money.

Adjuno chief executive Terence Hong says there are some seed funds available in Ireland but more are needed if the country wants to style itself as Europe’s answer to Silicon Valley. “Really, a large part of funding has to come from private industry. Even with Enterprise Ireland’s matched funding, that is contingent on a private investor or a seed fund pulling the trigger first.”

Hong thinks that constantly adding more companies is essential to creating the density of activity that a true start-up hub needs, as this leads to healthy competition and collaboration.

However, an additional concern is the availability of software skills among the local workforce. “I definitely see a challenge in the later stage when we look for developers and technical people in Ireland,” says Pigrukh.

Overall, Horn believes the boost in activity here comes at a good time. “Right now, there is no one centre in Europe as a hub for tech start-ups in the same way as Silicon Valley in the US, so it’s a golden opportunity for us,” he says.

He says it’s important for Ireland to have other assets besides the 12.5 per cent corporation tax rate to keep the larger technology players like Google, Facebook and Intel embedded in Ireland. “If you have a hotbed of start-ups doing interesting things, it plays to the multinational agenda,” he says.