Up to €100,000 per business available under new Pre-Seed Start Fund.
Enterprise Ireland has revealed a new funding support designed specifically for high-growth early-stage start-up firms and entrepreneurs in the manufacturing and internationally-traded services sectors.
The fund comes at a time when seed funding for early-stage entrepreneur-led ventures is a cause for concern. Recent H1 data from TechIreland indicated that rounds less than €500,000 (mostly seed and pre-seed) fell to the lowest level in five years.
“It is an important, and timely, strategic intervention”
The new fund, which provides up to €100,000 per business, was developed following extensive consultation with entrepreneurs and stakeholders in the Irish start-up ecosystem.
Bridging the gap
It is one of a series of specific targeted initiatives which Enterprise Ireland is taking as part of its strategic ambition to encourage and support an increased number of new high growth start-up companies in Ireland.
“It is an important, and timely, strategic intervention,” said Enterprise Ireland CEO Leo Clancy. “This builds on the extensive range of supports available to assist entrepreneurs and start-up teams to take those critical first steps in establishing and developing innovative new high growth businesses with international potential.
“Securing private sector investment for very early-stage companies has always been challenging and Enterprise Ireland plays a critical role in bridging this gap when cash is required for activities including product development, recruitment into the team and developing channels to market.
“In designing the new Pre-Seed Start Fund we have listened carefully to the start-up community and the wider start-up ecosystem about the needs of new businesses, resulting in a new, enhanced offer for early-stage entrepreneurs. The new Pre-Seed Start Fund, in conjunction with the Enterprise Ireland broader range of services for start-ups, responds to current market needs and provides entrepreneurs with an attractive financial offering to help accelerate their start-up business plans.”
The Pre-Seed Start Fund replaces the Competitive Start Fund, which provided €50,000 for 10% ordinary share capital and was widely viewed by some in the sector as an inappropriate valuation of a business in today’s market.
The Fund will take the form of a convertible loan note with two options – €50,000, and also €100,000 (paid in two tranches subject to key targets being met). A 3% interest rate and a five-year term will apply, with a conversion discount of 20%. It is also planned to increase the number of successful applicants under the new scheme.
The new fund was welcomed by lobby group Scale Ireland, which consulted and engaged with Enterprise Ireland on the changes.
“We welcome the new PreSeed Start Fund because the conditions are very attractive and beneficial for early stage founders,” said Scale Ireland chair Brian Caulfield.
“We believe this is the right approach. We also want to acknowledge that when it was first launched, the Competitive Start Fund played an important role, however in recent times, it has proved less attractive to many founders.”
His colleague, the CEO of Scale Ireland Martina Fitzgerald, added: ‘‘This is a significant and strategic decision by Enterprise Ireland and we want to acknowledge the consultation between Leo Clancy and Enterprise Ireland with us on this key funding programme for early stage founders. It sends a very strong signal to the sector that founders’ views and feedback are important.’’
There are currently more than 2,200 indigenous tech start-up and scale-up companies employing almost 55,000 people around the country. For each additional job in the average high-tech firm, five additional jobs are created outside that firm in the local community.
Structure and criteria
Enterprise Ireland standard investment will be in the form of a Convertible Loan Note (CLN), and is intended to convert into equity on a future priced round at a 20% discount.
In addition to the investment, successful applicants will be supported by an Enterprise Ireland Development Advisor in their sector and can avail of a range of Start–up supports, including mentoring, access to Enterprise Ireland Market Research Centre, market insights, access to business networks and wider ecosystem offerings to support development of their start up business.
Applications received will be reviewed and assessed by considering the objective of the offer, required criteria, the stage of development of the start-up and assessment of the potential of the business.
A number of ‘PreSeed Start Fund’ application-support workshops will be held online by the national Business Innovation Centres (BICs) over the coming weeks. Details of these workshops as well as the relevant application forms and eligibility criteria can be accessed on the Enterprise Ireland website at www.enterprise-ireland.com/pssf
