Financing New and Expanding Companies
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Financing New and Expanding Companies BES & Seed Capital Scheme and the Role of Enterprise Ireland 12th November 2007 Cork . Gerard O’Brien High Potential Start Up Division Enterprise Ireland. Enterprise Ireland. Established in 1998

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Gerard O’Brien

High Potential Start Up Division

Enterprise Ireland


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Enterprise Ireland

  • Established in 1998

  • Responsible for supporting the establishment and growth of Irish owned and controlled enterprises

  • Clients are manufacturing and internationally traded services sector companies employing 10 or more and

  • City and County Enterprise Boards are responsible for companies employing less than 10 with the exception of High Potential Start Ups (HPSUs).


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Types of new enterprises we support ….

- HIGH POTENTIAL START UP BUSINESSES -

What is a ‘High potential start-up’ business?

  • Company that manufactures or trades services internationally;

  • Usually product / services based on technological innovation;

  • Export oriented;

  • Involving industry experienced team

  • Potential for sales > €1m and 10 employees within 3/4 yrs

  • Irish owned and located in Ireland.


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Sources of Start Up Finance

  • Entrepreneurs, Relatives and Friends

    • 3 F’s - Friends, Family and Fools often avail of

    • Seed Capital Scheme/BES

  • Debt

    • Bank loans, overdrafts, invoice discounting

  • Venture Capital

  • Private Investors

    • Wealthy individuals - BES

    • Cashed out entrepreneurs - BES

    • Business angels -BES

    • BES

  • Development Agencies

    • Feasibility Study grants

    • R&D grants

    • Employment grants

    • Preference shares

BES has been and will continue to be an essential feature

of Ireland’s start up financing system


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Background to the New BES/SCS and Changes

  • Sustained campaign by DETE, Enterprise Ireland and Forfas

  • Government Commitment – Budget & Finance Bill but

  • EU Commission Approval Required

  • EU Commission Approval – 24th August 2007

  • Clarification – EU, DETE, Finance,Revenue, EI

  • Commencement Order 6th September 2007

  • Effective 1st January 2007 to 31st December 2013

  • However “Terms & Conditions Apply”


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Main Changes

  • Schemes extended 7 years

  • Company limit from €1m to €2m

  • Investor limit from €31,750 to €150,000 BES €100,000 SCS

  • Approval Vs Payment of Employment grant qualifies ITS companies (previously needed payment)

  • Recycling Companies must be in receipt of grant or financial assistance

  • Includes a definition of recycling


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Role of Enterprise Ireland - Procedures

  • Specific, Limited & Clearly Defined

  • Procedure differs for BES and SCS

  • Procedure differs depending on Sector e.g Manufacturing, Internationally traded Services, R&D, Recycling


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Industrial Development Act 1986 (No. 9 of 1986).SCHEDULE

Software development;

Data processing and electronic commerce;

Technical and consulting services;

Commercial laboratory services;

Administrative/service centres, co-ordination and headquarters services

Research and development services;

Media, multimedia and recording services;

Entertainment and leisure services;

Training services;

Publishing services;

International Financial services;

Healthcare services;

Construction related services;

Environmental services;

Supply Chain Management and Logistics Management services;

Commercial international standards bodies;

Technology test centres;

Prototype laboratory services;

Intellectual property services;

Group Procurement;

Shipping services.




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Changes - Eligibility for BES

Dublin and Mideast.

Seed, start up stages for small and medium

Expansion stage for small only

Cork city and county

Up to 31/12/08

Seed, start up and expansion stages for small and medium

From 01/01/09

Seed, start up stages for small and medium

Expansion stage for small only

All other Counties

Seed, start up and expansion stages for small and medium


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Implication of BES/SCS if Companies Apply for Grants and other supports from Enterprise Ireland and other Development Agencies


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Changes – Reduction of Grants & Payments other supports from Enterprise Ireland and other Development Agencies

  • EI must reduce the % level of some supports or maximum eligible amounts offered to companies

  • By

    • 50% in Dublin, Kildare,Wicklow & Meath (Cork from 2009)

    • 20% in all other areas

  • Total Reduction to equal total BES/SCS Investment received

  • Reduced Grant and supports limits will apply for 3 year period starting with 1st investment since 1st Jan 07

  • Companies required to make declaration of BES/SCS received


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When is the 3 year time period triggered? other supports from Enterprise Ireland and other Development Agencies

  • BES / SCS receipt date

    How will the process work within EI?

    • EI monitors – date of receipt and how much,

    • Reduction in subsequent approvals after the date of BES receipt,


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What impact will the other supports from Enterprise Ireland and other Development Agenciestiming of the EI approval have on the reduction of grants and equity supports

  • EI approval before BES is approved to the Company?

    None

  • EI approval after BES is received by the Company?

    Reduction

    If Company has a risk capital investment since the 1st of January 2007 that could convert to BES, Enterprise Ireland approval must also be reduced.


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Grants/Supports other supports from Enterprise Ireland and other Development AgenciesSubject to Reduction

  • Consultancy,

  • Trade Fairs,

  • Capital Grants/equity,

  • Training grants/equity

  • Employment Grants/equity (including key skills in BMW only).


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Grants/Supports other supports from Enterprise Ireland and other Development AgenciesNot Subject to Reduction

  • Research Technology and Innovation (RTI),

  • R&D Grants/equity,

  • Feasibility studies,

  • Proposed new Innovation aid, (awaiting EU approval)

  • Western Investment Fund,

  • De minimis aid, e.g.

    • Market Research,

    • Mentor,

    • Employment grant (Key skills) in non BMW,

    • County/City Enterprise Boards,

    • Bord Bia,

    • FAS.

    • EPA


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Talk to Us…… other supports from Enterprise Ireland and other Development Agencies

  • If you or a clients are starting a business that has export potential

  • If you are looking to Invest in new start ups

  • If you have questions around EI’s role in certifying you or a client for BES/SCS

  • Gerard O’Brien

  • Tel: 01 206 6433

  • [email protected]


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