Patricia O’Sullivan the M50 programme manager wrote an excellent comment on my previous post about EI funding. I’ve given her this post because her information is too valuable to bury in the comments.
==> Patricia O’Sullivan Speaks
Thank you for putting this blog up Joe, it is something a few of us have had on a ‘to do’ list for years!
I have been the manager of the M50 EPP enterprise programme for
almost 6 years and have assisted a large number of companies prepare
for CORD, EI equity investment and the other grants you mention. This
experience allows me to add some comment having seen the workings a
number of times. I hope they help.
EI and Equity Investment
Yes, the EI staff are on your side and they do want to give you the
money in point of fact they are constantly trying new initiatives to
get even more companies to approach them. EI however must work within
their remit and are closely governed in what they can / can not do by
both the Irish Government and by the E.U.. You must therefore ensure
that your company meets all the criteria and that it is at a stage of
development where there is enough evidence to show that the likelihood
is that it will be generating the bulk of revenue from export, meeting
employment figures, etc.. Above all they are not a charity fund – your
company must reflect a good investment – whilst EI are softer than a
venture capital company or even than many professional business angles
they are still reviewed by their superiors and must account for their
investment decisions so the risk / return must look acceptable (even if
a little more risky than others might accept). And, remember that under
their remit EI’s hands are tied and their investment is only allowed to
cover a percentage of your R&D expenditure – not your sales and
marketing activities much as they wish they could.
Something Joe did not mention and which I am not sure if it is
still essential but in every case that I have experienced the DA has
visited 3 or 4 customers or potential customers at least two of which
had to be abroad (UK did not qualify) to confirm that the product or
service will sell. Another point worth noting is from the date of
application to the day the cheque is in your hand can be longer than
people expect – typically between 8 and 12 months in my experience due
to the time for all the various steps Joe outlined so clearly and to
the necessary revisions of documents not to mention silly summer /
Christmas seasons and vacations of key people. This point catches many
people out because as Katherine Lucey so wisely said the matching funds
are not what is in your bank the day you apply or what was invested in
the past but rather what is there after some point in the EI process
which tends to occur before final approval. This critical point catches
many people out because they have their BES or other funds spent too
early. You need good financial management to ensure that you do not get
caught out this way and end up having to raise more private funds and
lose yet more equity – BE WARNED.
Your EI Development Advisor (DA)
These people are critical to your success in obtaining grants and
equity and most of them are very good BUT from what I have been told
each of then can have up to 65 companies allocated to them at any one
time so they can not keep up with them all. That is before we take into
account the need to attend internal meetings, external events and the
usually bureaucracy that goes with a large organisation. So you MUST
help your DA by keeping them in the picture with regular updates. I
suggest a short monthly email with a short list of bullet points under
a couple of headings e.g. ‘Achievements this month’ and ‘Issues we are
facing’. Then a few days later follow up with a quick phone call to see
what they think – to get them thinking how they can help you they need
to know what is going on. It is too late after an event if you are told
“we could have paid for that�.
Incubator Programmes
Yes, I
recommend the incubator programmes. There are many of them around the
county and participation on many of them entitles you to ‘apply’ for
CORD funding. Other reasons for attending incubator programmes are (1)
to mix with others in the same boat; (2) to benefit from the advice and
experience of others who know the ropes; (3) to be made aware of
various things i.e. grants and other supports you would not have known
about (see Ian Snipper’s reply about CEB); and (4) this is the reason
quoted by successful entrepreneurs who have sold a previous business,
and it is to have a discipline placed on you to get out of your comfort
zone and do some of the not so pleasant but necessary things for
success.
CORD Funding
CORD funding,
if you qualify for it, is effectively 50% of your previous year’s
salary to a maximum grant of €38k (there has been talk of increases in
this figure for some time but no sign yet). The grant may have an
expenses element if 50% of your previous salary is less than €38k to
take you up near to or to that max figure. If you are on an incubator
programme that pays you a stipend then the value of the stipend ‘may’
be deducted from the CORD grant. The CORD money is paid monthly in
arrears like a salary. There is a lot of confusion about whether it is
taxable or not. A number of my former participants have got letters
from Revenue saying it is not, another was told it was but later got a
refund, many take the view it is a grant and say nothing (sort any
potential future consequences at the time). The advice of EI is that
you should seek direction from your accountant. The EI staff are not
tax advisors and are reluctant to give any advice on this matter for
obvious reasons.
Feasibility Grants
Whilst it
is rare you can actually qualify for a Feasibility grant and the other
grants Joe mentions whilst in receipt of CORD. I have had a number of
participants do so successfully. However you should note that EI will
not double fund the same activity so it must be for a different
activity. Let me give you an example of a recent case. A participant
was granted CORD in January this year to “investigate the feasibility
of a software services business and prepare a business plan�. During
the research activity he conducted in the early months on the incubator
programme he discovered that the usefulness of his offering would be
seriously limited unless he did some R&D in the field of
electronics to widen the market for his software service. In early
summer he applied for and received a feasibility grant which is 50% of
total expenditure (50% of €60k if I recall), used it with his own cash
to pay a third party to undertake the work and is currently integrating
the hardware and software prior to launch. This was clearly a different
activity and therefore qualified. I have seen others get key person and
other grants whilst on CORD – the activity to be funded and status of
your company are what is important.
Sorry about the length of this post but this is a complicated area and I hope that my post has helped a bit.
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