30 Million available for HPSUs – Shurely Shome Mishtake?

Silicon Republic reports recently that,

Enterprise Ireland said that to date it has committed some €148.75m to eight seed and venture funds which have succeeded in raising in excess of €500m for investment in early-stage and growing companies

Feargal O Moráin, executive director of Enterprise Ireland, goes on to say,

The 2007-2012 Seed and Venture Capital (VC) Programme, the third such programme to date, has been extremely successful in raising finance for investment in Irish companies at all stages of development … With over half a billion raised for investment to date, this is of particular benefit to seed and early-stage Irish companies

Eh, no Fergal this is of no benefit to  seed and early stage Irish companies. I have no record of any of the VCs that have raised funds investing in any seed or early stage companies to date. The reality is once EI throws it money into the VC pot is has zero control over how that money is disbursed by the VCs. Nor should it have, that’s not howVCs interact with their limited partners (which is what EI is).

Luckily we have the director general of the IVCA, Regina Breheny who offers a more honest assessment of where this money will go (again in Silicon Republic),

Most of our investments would be in software firms that can grow to scale, not in dot.com companies or because someone has a nice widget … Funding in Irish companies is at its highest now since 2001, but much of these are follow-on investments in existing companies. There is still a lot of work to be done in raising money to seed new start-ups. Venture capitalists are currently raising money but it’s debatable how much of these funds will go into new plays in the next five years

So thanks for the millions EI, but we are unlikely to put it where you want it to go.

I’m all for a thriving VC market in Ireland but my own view is that EI’s co-investment strategy is a more effective vehicle for ensuring that Irish early stage and seed startups get the required funding they need.

It will be very interesting to review the protfolios of the irish VCs (Delta Partners, the AIB Seed Capital Fund, Atlantic Bridge Ventures, Kernel Capital Partners and Fountain Healthcare Partners)  who have taken the EI shilling at the end of their current investment cycle.