18th May 2010
Press Release: Bank Seed Monies Should be Used to Create Multimillion Euro Co-Investment Fund
Dublin, IRELAND - May 17th 2010: The Halo Business Angel Network (HBAN), the national network for angel investing in Ireland, has urged the Government to utilise monies to be set aside by the two main banks for seed capital financing to create a multimillion euro co-investment fund, to help support early stage technology and life science enterprises.
HBAN has said that the combined €40 million sum that is to be used by Bank of Ireland and AIB as seed capital for Enterprise Ireland-supported ventures* should instead to be used to set up a co-investment fund, along the lines of similar initiatives in other European countries. The proposed co-investment fund should work on the basis that any investments by business angels through a formalised syndicate will be matched under the same terms by public sector funds, said HBAN.
Diane Roberts, National Director, HBAN, said: “We believe that an Irish co-investment fund would allow for individual investors and investment syndicates to be systematically matched with appropriate opportunities. In turn, this would support the creation of an angel capital industry in Ireland, where high tech entrepreneurs will be able to access essential working capital”.
“This co-investment fund model is already working in a number of countries, including Belgium, Portugal and Scotland. Governments have all announced co-investment funds as a means of promoting activity among angel investors in those countries. In Ireland, the importance of angel investment has already been highlighted in the Government’s Innovation Taskforce report as a means of increasing the availability of financing for high potential firms,” said Ms. Roberts.
This recommendation has been backed by an international expert on angel financing. Nelson Gray, who is a board member of LINC Scotland, the Scottish national angel investment network, said the Irish Government needed to consider setting up a fund similar to the stg£75 million Scottish Co-investment Fund (SCF), managed by Scottish Enterprise and used to support indigenous, early stage enterprises in Scotland.
Mr. Gray, who was speaking in Dublin at a seminar organised by HBAN, said: “Governments have to take steps to promote investment by private investors in indigenous firms in high growth industries, like life sciences, medical devices and information technology. In Scotland, we found that the establishment of the SCF, to invest funds alongside private investors, helped to bring a viable angel capital industry into being”.
Figures from Scottish Enterprise for 2009 show that, since the SCF was set up in 2003, there has been stg£114 million invested in 154 companies, with half of this investment coming from syndicates of angel investors.
“Scotland actually has an economic and demographic profile not dissimilar to Ireland’s, and we have found that the co-investment fund has, overall, had a hugely positive impact, in terms of fostering investment in local industry from business angel investors and offering a critical source of finance for early stage entrepreneurs,” said Mr. Gray.
The SCF operates on the principle that any investments by business angels through a formalised syndicate will be matched under the same terms and conditions by public sector funds. The maximum investment in any one deal is approximately stg£1 million, with most deals being around the stg£500,000 mark.
Damien Callaghan, Intel Capital Director and member of the Government's Innovation Taskforce, said: “To create the high value jobs we need, via new, innovative export-orientated companies, our entrepreneurs need easy access to risk capital. Experienced business people who invest their money and personal time into entrepreneurs’ businesses - i.e. business angels - are a fundamental element of an innovative economy”.
“The Innovation Task Force recommended that the state help stimulate a strong and active business angel community. The Scottish example and the strong results achieved shows how this can be done in a really innovative way,” said Mr. Callaghan.
Liam Nellis, CEO, Intertrade Ireland, said: “The kind of co-investment fund that has been proposed would be a valuable boost to the development of an angel financing industry in Ireland. In turn, it would be a potentially crucial source of finance for early stage firms in the bioscience and technology sector”.
“Ultimately, these are the industries which are likely to be integral to the recovery of the Irish economy in the coming years, which is why the creation of alternative sources of funding for these companies is so important,” said Mr. Nellis.
HBAN has already supported investment of more than €4 million in 21 Irish early stage enterprises, through its regional networks and investment syndicates. The 21 firms are from a range of high tech areas, including medical devices, mobile security solutions, life sciences and biotechnology solutions and software development.
* The Minister for Finance Brian Lenihan informed the Dáil on March 30th that: “Bank of Ireland and AIB must…make available €20 million each for seed capital to be provided to Enterprise Ireland supported ventures, building on the very successful programme launched in 2009”.
For further coverage see:
http://www.businessworld.ie/livenews.htm?a=2603620
About Nelson Gray: Nelson Gray is a chartered accountant and entrepreneur who, following the sale of his own business, has become a ‘hands on’ mentor, business angel investor, non-executive director and fund manager. In addition to general management and strategic development, Nelson provides assistance to companies looking to secure outside funding from both banks and equity providers. He acted as the fund manager for Scotland's leading angel investment syndicate and later, managed two early stage investment funds that invested in over 50 Scottish companies. He has provided advice on funding to Scottish Enterprise, the Scottish Executive and the Enterprise Committee of the Scottish Parliament, as well as a number of internationally based development agencies. As a business angel investor, Nelson has made over 20 personal investments in new and developing companies. In 2008, Nelson was awarded the title ‘Business Angel of the Year 2008’ by the European Business Angel Network (EBAN). Mr. Gray is currently a non-executive director of LINC Scotland. Further information is available at: http://www.nelsongray.com/.
About Halo Business Angel Network (HBAN): HBAN is an all-island umbrella group for business angel networks, dedicated to the promotion of angel investment and supporting the early stage entrepreneurial community in Ireland. HBAN operates regionally through the Dublin, Cork, Waterford, and Galway Business Innovation Centres (BICs) who each run local angel networks. Collectively HBAN actively works to increase the number of angel investors involved in investing in early stage companies and supports the formation of new and existing angel networks, both regionally and internationally, and within industry sectors. HBAN, which is a joint initiative of InterTradeIreland and Enterprise Ireland, also acts as a voice to Government, stakeholders, business and the media to promote the interests and needs of the angel investment community. Further information is available at:http://www.hban.org.
For further information contact:
Diane Roberts, National Director
Halo Business Angel Network
T: 01 665 0420
