The Government is keen to do more to make it easier for investors to back indigenous technology companies, Tánaiste and Minister for Business Leo Varadkar has said.
Speaking at an event held by Scale Ireland, Mr Varadkar said that as it starts preparations for Budget 2022, the Government is looking at incentives to help start-ups and those scaling to survive and thrive.
This includes the Employment Investment Incentive Scheme (EIIS), which Mr Varadkar said he was keen to see revamped. A public consultation on the EIIS, a State-backed initiative that allows small investors to claim relief on investments in early-stage companies, recently commenced.
The tax incentive was initiated in 2011 to provide relief of up to 40 per cent on investments of up to €250,000 over four years, or €500,000 for investments over seven years. Although it is used by some small businesses to raise capital, there has long been a call from the start-up community for it to be enhanced to make it more attractive to investors.
Mr Varadkar also said he was interested in seeing Capital Gains Tax revamped but added he was limited in what he could do as “not everyone in the coalition is as enthusiastic about reducing taxes on businesses as I am.”
“We must enable companies not just to recover but also to grow and position themselves for new business opportunities,” Mr Varadkar said of incentive reform.
More than 500 people attended the virtual event organised by Scale Ireland, a not-for-profit backed by many leading figures in the start-up community.
Scale Ireland chairman Brian Caulfield said that progress has been made recently in terms of incentives for start-ups but added that accessibility is still an issue for many companies.
He said reform of EIIS in particular is an opportunity to encourage increased angel investment at a time when venture capital funding for early stage companies has weakened.
“There is enormous amounts of capital avail for later stage businesses but it is very difficult right now for early stage companies to raise financing,” said Mr Caulfield.
Other speakers include Claire McHugh, founder and chief executive of interactive video technology company Axonista, and Bobby Healy of drone delivery start-up Manna.
Ms McHugh welcomed Mr Varadkar’s comments on incentives reform saying that many of those currently available, in particular R&D tax credits, were very hard to access for small, indigenous companies such as Axonista.
Mr Healy, who also previously co-led Cartrawler, added that multinational companies usually receive better State supports than scaling indigenous ones, a factor that can have a big impact on fast-growing firms competing with bigger players in areas such as recruitment.
“Salary is a blunt tool we use to allow us to compete with multinationals but a better option is stock options for employees,” he said.
“Ireland has the poorest stock option regime than literally every other entrepreneurial country in the world right now. That is disappointing and is the one space where improvements can be made,” Mr Healy added.