Investors are about to get a big pot of cash from Europe to put into Irish startups

AS MUCH AS €20 million is set to be made available to Irish business angels to invest in Irish startups, Fora has learned.

The European Investment Fund (EIF), a European agency focused on providing finance to SMEs that is backed by the European Investment Bank, will pair up with Enterprise Ireland to set up a new fund under the European Angels Fund initiative.

The new fund will provide money to business angels, who will in turn invest it in promising Irish businesses.

Business angels are usually high-net-worth individuals who privately invest their own money in companies during their early stage of development, as well as contributing their own experience.

They tend to commit between €50,000 and €250,000, although some put in more, and look to invest at an earlier stage than many venture capital funds. Business angels usually invest alongside other private and state backers.

The EIF previously published a notice on its website saying that a “€20 million initiative funded by EIF and Enterprise Ireland” was set to be established in September 2015, however Fora understands it will only be officially unveiled in the coming weeks.

The EIF said that the fund, to be called Business Angel Fund Ireland will aim to “provide equity to business angels and other non-institutional investors to finance innovative companies in the form of co-investments”. Enterprise Ireland declined to comment.

Following Europe

The European Angels Fund has already established similar initiatives in several countries, including Austria, Germany and Spain. Under the initiatives the fund enters long-term agreements with business angels, committing a predefined amount of equity for co-investments.

All investment decisions are taken by the business angels and their investments are matched by the fund.

The new €20 million fund would represent a significant cash injection to the relatively small Irish business angel market. The Halo Business Angel Network estimated that last year that business angels invested just under €11 million into about 50 Irish companies.

HBAN, a joint venture between Enterprise Ireland and InterTradeIreland, is an all-island umbrella group responsible for developing business angel syndicates.

Irish business angels 

The group has said it believes there is the potential for much greater angel investor activity in the Irish market.

The organisation’s national director John Phelan previously told Fora that business angel investing tends to be split between the ‘visible’ and ‘invisible’ markets.

“What all the research will tell you is that the visible market is typically 15-20% of what’s out there, so that means there is 80-85% that we don’t see that I would like to capture,” he said.

Phelan also said that HBAN is trying to form foreign syndicates of wealthy expats to invest in Irish companies.