Access to finance is the biggest challenge facing Irish startups and scaling companies, according to the findings of Scale Ireland’s 2023 State of Start-ups Survey.
Two hundred and forty eight tech start-up founders and CEOs contributed to the survey, which was launched to gauge the sentiment of entrepreneurs in the sector on key issues including the economy, employment, taxation, state supports and incentives, skills, gender, and climate.
Finance biggest issue for Irish startups
More than half of the CEOs and founders surveyed (51.6%) considered funding to be their biggest challenge in the last year, (up from 47% in 2021) as compared to recruitment and retention of staff (17% in 2022, compared to 25% in 2021) and the cost of doing business (12% in 2022, compared to 8.7% in 2021). Other issues included tax and regulation burdens and lack of expert advice and support.
Other key findings:
Finance: 80% of respondents felt it was difficult or very difficult to attract capital which is just slightly higher than last year.
Staff: 35% of start-ups have found it more difficult to recruit staff in 2022, down from 45.7% in 2021. And while 40% of start-ups have lost staff in the last year, 22% of start-ups have let staff go.
State supports: uptake of state supports remains unattractive with 83% of respondents not availing of the KEEP share options scheme (up from 77.8% in 2021), and 66% not availing of the R&D Tax credit (similar to 2021). While 73% of those who availed or looked at availing of the Employment Investment Incentive Scheme (EIIS) found the process difficult or not easy. 49% of respondents found the R&D Tax Credit scheme complicated.
New PreSeed Fund: Almost two thirds (62.5%) believe Enterprise Ireland’s new PreSeed funding will improve the environment for start-ups.
Cost of Living: 12% identified the cost of doing business as the biggest issue facing start-ups. 65.7% said inflation or cost of living issues had impacted their business.
Sustainability: 66.9% of founders/CEOs questioned did not have a sustainability plan, slightly down on last year (70.4%).
The publication of the second State of Start-ups Survey comes as Scale Ireland’s second Regional Start-up Summit takes place on Saturday (25th Feb) by An Taoiseach, Leo Varadkar, and will include some of the country’s leading start-ups and scaling companies. Minister of State Dara Calleary is also addressing the summit in Galway from 11am -1.20pm.
The event is supported by Microsoft Ireland, Ireland Strategic Investment Fund, Atlantic Bridge, PorterShed, Science Foundation Ireland and Spark Crowdfunding.
Responding to the survey’s findings, the CEO of Scale Ireland, Martina Fitzgerald said: ‘The survey clearly demonstrates yet again that many founders are finding state supports and incentives complicated, and difficult to navigate which needs to be addressed. We are calling for the setting up of a taskforce to address this recurring issue, which is denying many companies of the opportunity to avail of supports that were put in place to help them’.
The Chair of Scale Ireland, Brian Caulfield, added: ‘The findings reinforce the challenging investment landscape facing start-up and scaling companies and the need to attract more private investment into the sector. Direct government funding, while welcome, requires a significant investment in process and the funding need is immediate.’
There are currently more than 2,200 indigenous tech start-up and scale-up companies, employing more than 55,000 people in Ireland. For each additional job created by a start-up, five additional jobs are created in the wider economy. There are 188 start-ups in Cork, 151 in Galway and 87 Limerick, with clusters of start-up and scale-up companies in counties Clare, Kerry, Kildare, Louth and Waterford.
About Scale Ireland: Scale Ireland is an independent not-for-profit organisation, which represents and advocates on behalf of Irish tech start-ups and scale-up companies. Scale Ireland’s purpose is to make Ireland a leading location for innovation and entrepreneurship.
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