New plan to create 93,000 extra jobs from start-ups over the next five years

Minister Bruton – we have many great entrepreneurs in Ireland, we just don’t have enough of them

9^th October 2014

A new plan aimed at creating an extra 93,000 jobs from start-up companies in the next five years was today launched by Minister for Jobs Richard Bruton TD together with Minister of State for Business and Employment Ged Nash TD and Minister of State for Skills, Research and Innovation Damien English TD.

Central Bank research shows that start-up companies in the first five years of existence account for two thirds of all new jobs created in Ireland; as part of the Action Plan for Jobs the Government committed to develop and implement a plan to increase the number of entrepreneurs in Ireland and thereby support thousands of extra jobs.

The Government’s National Policy Statement on Entrepreneurship in Ireland represents the first time a Government has published a comprehensive national plan for entrepreneurship. It is the Government’s plan to deliver an ambitious but realistic increase in the numbers of start-ups in Ireland over the next five years.

The plan follows on from and draws on the report of the expert Forum on Entrepreneurship, chaired by Sean O’Sullivan, and published earlier this year. The Minister and his Department also consulted with academics and entrepreneurs, other Government Departments and Agencies as well as the national business community through the Action Plan for Jobs forums in drawing together the plan.

The key target contained in the plan is to double the jobs impact of start-ups in Ireland over the next five years, from 93,000 currently. In order to deliver on this we must:

• Increase the number of start-ups by 25% - representing 3000 more      start-ups per annum
• Increase the survival rate in the first five years by 25% - 1800      more survivors per annum
• Improve the capacity of start-ups to grow to scale by 25%

Key measures in the plan include: 

Doubling the volume of funding to start-ups in Ireland from business angel investment. Angel investors are successful entrepreneurs or executives who invest private funds in start-up businesses. Analyses of successful start-up environments around the world, in areas including Israel and Silicon Valley, repeatedly point to the existence of business angel networks as key elements. A total of approximately €70million is currently invested per annum by business angel investors in Ireland.

• Co-working and accelerator spaces available for start-up businesses      right across the country. The LEOs and the Community Enterprise Centres      will form a key part of this – and this will be part of a new system of      supports for start-ups locally. Included in this will be new competitive      calls for funding, following on from the model pioneered successfully in      the Ireland’s Best Young Entrepreneur competition, which attracted over      1000 applicants from around the country
• New mentoring services for start-ups, including a national database      of mentors
• Entrepreneurship programmes in schools, third and fourth level      education, and in new apprenticeships systems
• New targets for Agencies, including a 12% increase in start-ups      supported by Enterprise Ireland by 2015
• New marketing plan to promote Ireland abroad as a location for      international start-ups
• Measures to promote entrepreneurship among under-represented groups      – including women, young people, migrants and older people
• Specific reductions in the administrative burdens facing start-ups,      including the length of time it takes to register a new business and the      burden of applying for licences
• New supports for innovation by start-ups, and ambitious targets for      EI and SFI to increase innovation activity by start-ups
• New measures to support start-ups to sell abroad, including      opportunities in supply chain of IDA companies
• An annual report to the Minister for Jobs, analysing Ireland’s      performance in entrepreneurship against domestic and international      benchmarks

The plan also sets out a range of issues in the taxation system which, if addressed, could provide a major boost for the prospects for start-ups in Ireland – however consideration of these matters will ultimately be matters for the Minister for Finance and Cabinet in the context of Budget 2015 and future Budgets, including:

• Share-based remuneration in private companies
• Seed Capital Scheme and Employment and Investment Incentive
• Capital Gains Tax
• Income tax

The measures in the plan will be implemented through the Action Plan for Jobs process in 2015 and future years. It is anticipated that entrepreneurship will be included as a Disruptive Reform in the 2015 plan.

Speaking today, Minister Bruton said: “In Ireland we have great entrepreneurs – we just don’t have enough of them. Given that two thirds of all new jobs come from start-ups, it is crucial that we improve our supports in this area if we are to create the jobs we need. That is why earlier this year I asked a group of academics and successful entrepreneurs – the people who have actually done it – to come up with a list of recommendations for how we can improve our performance in this area. Many of their recommendations were for business or private institutions to implement – but there is much that Government can do to incentivise, support, promote and encourage more people to start businesses – and that is what today’s plan is about.

“We have set ambitious but realistic targets for ourselves – most importantly, a doubling of the jobs impact of start-ups by 2019. We have set out what Government will do to help deliver on this –including interventions in mentoring, access to finance, education, promoting start-up as a career option, and providing spaces where entrepreneurs can work. More and more people in Ireland are choosing to create a job, instead of getting a job – I am convinced that with the right supports from Government we can deliver a step-change in this area and create tens of thousands of jobs that we badly need”.

Minister Nash said: “Entrepreneurship is critical to the health of the Irish economy. We now have a comprehensive policy to support our existing entrepreneurs and to ensure a steady pipeline of future business founders. Start-up companies usually begin on a small scale, and as the Minister with responsibility for SMEs I am determined to work with, and on behalf of, small businesses to implement this strategy with my ministerial colleagues. We need to encourage more people to start their own businesses and have the supports in place to assist more companies survive the difficult first few years - this strategy is the blueprint to do just that.”

Minister English said: The dynamic process of entrepreneurship and new firm creation introduces new innovations throughout the economy. Therefore, entrepreneurship in combination with innovation has a vital role in sustained economic growth and job creation. Generating fresh solutions to problems and the ability to create new products, processes or services is where the entrepreneur can be a driving force”.

 NOTES FOR EDITORS

The National Policy Statement on Entrepreneurship in Ireland is available at: http://www.djei.ie/enterprise/smes/PolicyStatementEntrepreneurshipinIreland.pdf

 The actions contained in the plan are centred on six specific areas:

1. Culture, human capital and education
2. Business environment and supports
3. Innovation
4. Access to finance
5. Entrepreneurial networks and mentoring
6. Access to markets

 The plan sets out strategic objectives to be delivered under each of the six areas as follows:

1. Culture, human capital and education

• Make entrepreneurship an integral part of our ambition as a nation.      Support its development in our education system, in our communities and in      corporate behaviour.
• Celebrate and reward successful entrepreneurs.
• Ensure that greater numbers of people, particularly in      underrepresented cohorts such as women, youths, migrants and older persons      start and run their own business.
• Improve the quality and range of ICT professionals domestically to      make Ireland a hub for technology startups.

2. Business environment and supports

• Create a business environment in Ireland where it is easy to start      up and grow a new business in terms of Company Law; Tax; Regulation;      Licensing and where it is one of the most attractive environments in      Europe.
• Promote best in class standards across the network of Enterprise      Ireland and Local Enterprise Offices which fully exploit the enterprise      assets of their community and foster new thinking in the enterprise area.
• Stimulate and support high levels of quality entrepreneurial      ventures with high growth, export, wealth and job creation potential.

3. Innovation

• Make Ireland a location of choice for high quality international      startups.
• Develop the best infrastructure to support technology transfer into      commercialisation as a new business opportunity (Knowledge Transfer      Ireland; Campus Incubators; Commercialisation Fund; Technology Centres).
• Develop a support framework where innovative startups can reach      their full potential.

4. Access to Finance

• Expand the range of access to finance instruments to match our      ambition as a startup hub so that all viable businesses have the      opportunity to access sufficient finance to meet their needs.
• Attract more angel and international venture capital investors and      continue to develop the domestic venture capital sector.
• Ensure that the banks develop the skills and focus necessary to      deliver appropriate financial instruments to startups and early stage      entrepreneurs.

5. Entrepreneurial networks and mentoring

• Improve the impact of mentoring as a tool to support      entrepreneurship.
• Increase the levels of peer networks for mentoring, angel finance      and problem solving that sustain entrepreneurship.
• Build world class entrepreneurial hubs and achieve greater regional      spread of such hubs, facilitating entrepreneurial leadership.

6. Access to markets

• Encourage local and national private enterprises to commit to offer      opportunities for fledgling businesses to find a market.
• Encourage public local and national authorities to commit to offer      opportunities for fledgling businesses to find a market.
• Ensure startups have clearly identified customer/market segments      and clearly developed value propositions and where appropriate are export      oriented in their thinking early in their development.

For the entrepreneurship environment to be truly effective, these elements must be mutually reinforcing, forming a coherent whole and supporting entrepreneurs throughout the entrepreneurship lifecycle. Looking at the broader picture, the first influence on the lifecycle of an entrepreneur is the attitude of society towards enterprise and the cultural values and emphasis on entrepreneurship in the education system. Society’s culture and attitude directly influences the individual’s capacity for creative thinking and attitude to risk. The business environment has a similar role, affecting both the obstacles the entrepreneur may encounter and the rewards they hope to achieve. Taxation, business regulation and the difficulties encountered in starting a business and in exiting, should it fail to achieve its anticipated progression, also influence the decisions of both established and potential entrepreneurs.

The quality of supports available from public institutions is also a critical factor in whether potential entrepreneurs will proceed and is an influence on the potential outcomes if they do. Public bodies can provide financial support in the difficult startup phase and offer advice and expertise to avoid pitfalls.  For many high potential entrepreneurs the accessibility of the innovation system to help drive forward fledgling ideas is crucial.

Often the need for access to finance goes well beyond the capacities of those involved in a resources or negatively affected their credit ratings. For others, potential funding institutions may be risk averse. That is why the provision of a broad spectrum of finance options, matching the different stages of an enterprise’s development, is essential. 

However, the role and influence of the State should not be over emphasised. The support networks formed between entrepreneurs and between entrepreneurs and investors can be equally important, arguably even more important, sources of essential support for startups. Business networks, angels, mentors, entrepreneurship hubs and hotspots all provide sources of practical experience and advice, contacts and interaction, helping entrepreneurs to avoid or overcome difficulties and to realise their potential.

Finally, young companies need access to markets, to clients and customers, to suppliers and distribution channels. Identifying potential customers in both the public and private sectors at an early stage is crucial to strengthening and building out the sales footprint. First time exporters also need support to develop the skills and resources they need to compete in global markets and to achieve ambitious revenue targets along the way.

 Minister Bruton launches New Plan to create 93,000 Extra Jobs from start ups over the next five years .pdf (size 1.7 MB)