Bank of Ireland is not renewing a crucial startup fund
Seed funding in Ireland has already dropped significantly since 2010.
BANK OF IRELAND has no plans to renew its startup fund in a blow for early stage Irish businesses looking to raise money to grow, Fora has learned.
Under the terms of the 2008 bank guarantee, both AIB and Bank of Ireland pledged to set up funds specifically for small and startup companies.
With support from Enterprise Ireland, AIB set up two funds worth a combined total of €75 million while Bank of Ireland’s two funds together are worth €49 million.
All four funds have invested in dozens of successful Irish companies such as social media news agency Storyful, which was acquired by Rupert Murdoch’s News Corp for €18 million in 2013, and mobile and social marketing company Swerve, which recently closed a $30 million funding round.
However the funds are nearing or have reached the end of their investment phase, meaning that they are focused on maximising the performance and value of companies in their portfolio rather than backing new ones.
Swrve chief technical officer Steve Collins
No plans
It was hoped that the funds may be able to be renewed when they reached the end of their investment cycles. However, Bank of Ireland confirmed that it has no plans to renew its funds.
A spokesman for the bank said: “Bank of Ireland is involved in a number of seed, equity and development funds and while we don’t currently have plans for new commitments through our early stage seed investment funds, this is kept under constant review.
“Support for startups remains a key objective for Bank of Ireland and we are increasingly focusing on investing in support initiatives which provide practical infrastructure and assistance to early stage businesses.
“(We) run a range of initiatives for startups including startup grinds, startup weekends and startup next.”
Bank of Ireland’s two funds have invested in a portfolio or more than 70 companies across a range of sectors. It would not confirm how much, if anything, was left to invest from its existing funds.
Market sources have indicated that the bank may move back into the seed market in the coming year, however at this stage it is uncertain.
AIB would not say if it has plans to renew its seed funds when asked by Fora.
Funding issue
The lack of seed funding is becoming an increasing issue in the Irish startup sector. Although total venture capital investment in Irish firms soared by nearly a third to €522 million last year, seed funding made up just 8%, or €44 million, of that amount.
This represented a sharp decrease on 2014, when 17% (€67 million) of all venture funding was seed finance. Overall, seed-funding activity has dropped 58% in the five years since 2010.
Drew O’Sullivan, the lead equity advisor for cross-border business group InterTradeIreland, warned last month that a lack of seed funding could threaten the development of some of Ireland’s most-promising new companies.
