Employee numbers are swelling at Irish companies with VC money in their back pockets

IRISH COMPANIES THAT have received venture capital investment created over 3,600 jobs in Ireland since 2012, according to new figures from the Irish Venture Capital Association (IVCA).

The study carried out by DCU Business School showed that employment in VC-backed firms increased by nearly 14% since 2012 – this is compared to the roughly 3% increase in the general economy over that same period.

Earlier this year, VC funding in Ireland hit an all-time high when €237 million was pumped into early-stage Irish companies during the first quarter of this year.

This report is the sixth in-depth analysis of VC-backed companies in Ireland. Since the first study was carried out in 2003, over 20,000 jobs have been created by venture-backed companies – roughly 1,600 per year.

Author of the report, Dr Eric Clinton of DCU Business School said companies that have received VC funding also export more and make larger investments in research and development (R&D) than other small Irish businesses.

Over the past three years, companies that have received funding from VC firms had exports totaling €1.5 billion, with a per annum growth of 25%. The increase in exports is higher than the 6.8% annual average increase in the general economy.

During that same period since 2013, R&D costs by VC-backed companies hit €417 million due to a 21% increase in spending per annum.

GDP to Venture ratio

The report also emphasised the positive effect that VC investment has on Ireland’s GDP, with a 0.1% increase in the ratio of VC to GDP resulting in 0.3% real GDP growth.

Since figures have been collected in 2003, VC as a percentage of Ireland’s GDP has increased from 0.06% to 0.20%, according to the report. This means Ireland has the highest percentage in Europe, ahead of Denmark with 0.11%.

IVCA director general Regina Breheny said the analysis showed how important it is for Ireland to have an active local venture capital market because the companies they invest in help breed the next generation of entrepreneurs.

She added that VC investment has also been proven to help give further impact to third-level projects backed by the government that have the potential to become commercially viable businesses.

Roughly three quarters of spin-out companies from Irish universities go on to secure venture capital funding, according to the report, which will help create more jobs in the long run.

Other results from the report:

• The number of incubators and accelerator programmes have trebled over the past five years
• Total companies looking for seed investment has swelled since 2003 from 16 to 81
• Since 2012, 13% of the total VC funding has been raised by startups and early-stage companies, which is lower than the 23% average across Europe.