Europe has opened up a €20m fund for rich investors to sink into Irish businesses

Business ‘angels’ could invest as much as €4m into Irish firms under the scheme.

By Paul O'Donoghue Reporter, Fora

A €20 MILLION FUND will be made available to business angels to invest in Irish companies looking to do work abroad.

The fund, which was first reported on by Fora several weeks ago, is a joint initiative between the European Investment Fund (EIF), a European agency focused on providing finance to SMEs, and Enterprise Ireland.

The money will be provided to approved ‘angels’, wealthy individuals who are typically experts in their chosen areas of business but also put their own money into early stage companies.

Investments will range from €250,000 to €4 million over 10 years. Backers will be looking to put cash into firms that are based in Ireland but are also trading internationally.

Boost to the market

The new €20 million fund represents a significant cash injection to the relatively small Irish business angel market.

Last year, financiers supported by the Halo Business Angel Network (HBAN), the main group for business angels in Ireland, made 40 investments worth €8.8 million in early-stage companies.

EIF chief executive Pier Luigi Gilibert said that the new fund will be a “significant financial support” for Irish business angels while still allowing them “maximum freedom to operate”.

He added that the new cash source will help to “further develop the Irish venture capital and entrepreneurship ecosystem.”

Jobs Minister Mary Mitchell O’Connor said that she is “acutely aware that one of the most important tasks for entrepreneurs, and also one of the biggest challenges in the start-up or the expansion phase, is to secure financing”.

“Business angels play a key role in supporting entrepreneurial performance. This new fund will enhance the financing environment further in order to develop and grow businesses which will create employment,” she said.

A cash injection of €4 million would represent a significant funding commitment from a business angel. The investors usually commit in the region of €50,000 and €250,000, although they also tend to pledege funds alongside state agencies and other private backers.

Room to grow

John Phelan, the national director of HBAN, recently told Fora that he thinks that there is scope for much more angel investing activity in Ireland.

“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.

Business angels that are interested in applying for money from the new fund can do so here.