Ireland is known to be very supportive of enterprise. The business-friendly tax policies, access to EU markets, skilled workforce, and robust government support for specific sectors make it fertile ground for scale-ups. That said, Ireland does not rank as well as you might expect when it comes to the number of new businesses registered.
Despite our reputation, our startup output per capita isn’t enough to get us into the top 20 countries worldwide. With its preoccupation on export-oriented, high-growth sectors, Ireland isn’t really looking out for smaller companies. Service companies and local businesses get almost no love at all, despite being responsible for a higher proportion of jobs. And when it comes to access to finance, slick ad campaigns like “backing brave” cannot hide the fact that Irish banks hardly ever lend to small businesses.
Existing support schemes can be limited
So, what can someone with a business idea do to get it off the ground? A quick Google search will turn up a variety of grants and supports available to help your new business. The reality, however, is that these schemes are limited in lots of ways. You must be in the right (GDP-friendly) sector, you must be ‘innovative’ (even though plenty of non-innovative companies are wildly successful), you must be at the exact stage of development the scheme is aimed at, you must have a certain number of employees, and you can only spend the cash on scheme-related costs.
Only larger companies find it smooth sailing to raise finance. For many smaller or less conventional businesses, government supports can feel more like a maze than a genuine launchpad. And many is the startup that discovers (once it’s too late) that accepting one scheme means they are no longer eligible for another one. As you throw yourself into the task of building a business and getting it to the point of revenue-generation, how can you continue to pay your mortgage and buy your groceries?
In general, Enterprise Ireland and Local Enterprise Office funding options (take High Potential Start-Up (HPSU) funding as an example) require extensive documentation and proof of scalability, locking out early-stage startups or founders without an established network. Some schemes require founders to give up equity or involve repayment terms that can be financially restrictive. Early-stage companies often struggle with these conditions, pressed to either dilute their ownership or grapple with a heavy repayment burden before they are ready.
An innovative alternative that’s open to all
In the UK and the USA, people going onto third-level education can access a student loan that helps them cover tuition and living costs. It’s an investment in the future – reducing skills gaps, raising productivity, and improving social mobility. I believe we should have a very similar government scheme that gives everyone access to a pot of money to start a business. I’d set it at around €50,000.
This scheme would stimulate economic growth by creating a culture of entrepreneurship. Just as students don’t stack up to credit scoring, neither do early-stage businesses. But a pot of cash anyone can access will create a level playing field and give people the safety net needed to launch a business. If you collaborated with other people to start this business, you could of course pool your loans in order to have a more significant startup sum.
Along the same principles as the student loan, you can do it once in your life and repayment is obligatory but over a reasonable timeframe once your income reaches a level that allows you to start the repayments. Repayment is not dependent on the business succeeding, so if your venture fails you would repay the loan from earnings from a subsequent business venture, a job, a bonus, selling a house, etc.
A culture of entrepreneurship for Ireland
Just like with student loans, it’s possible that some people will never earn enough money to repay their loan, but this is likely to be a low enough number. If you think about all the different grants available, while often they support the business to do ‘better’ – export more, gain market share, improve profitability, and so on – there can be no doubt that they are also given to companies that don’t make the most of the investment, or that subsequently fold.
As loans that must be repaid, with interest, this has to be more cost-effective than grants and schemes that are one-way only, even with a small percentage of defaulters. Without the complex application and selection processes, monitoring, and guard-railing that our business support schemes involve, it would be fairly cheap to administer.
We are not as entrepreneurial as we could be in Ireland. Yes, there is a thriving startup ecosystem here, but it is something of a bubble and relatively small and many people are oblivious to its existence. What we could really do with is a shift in general culture so that we all have the very real possibility of starting a business. If it’s a priority, as the government states often, to grow strong indigenous companies and not just attract multinationals, we must provide the soil in which they can germinate.
