Closer co-operation between the two business ecosystems would make the island more appealing to external stakeholders, suggests the report.
An all-island analysis of home-grown tech businesses has found that the Irish and Northern Irish ecosystems operate, in large parts, isolated from each other.
Scale Ireland and QUBIS, in a report released today (18 December), have said that funding, regulatory complexities and regional isolation between Ireland and Northern Ireland are challenges that need to be addressed in order to unlock newer growth opportunities for the island.
Scale Ireland is an independent not-for-profit organisation representing Ireland’s tech start-ups and scale-ups, while QUBIS is Queen’s University Belfast’s commercialisation arm. The report was commissioned by InterTradeIreland.
The study mapped the financial support ecosystem available to the island’s high-tech start-up and scale-up community.
Scaling challenges
The Irish and Northern Irish start-up ecosystems are built similarly, the report found, with similar supports and funding mechanisms.
While Ireland’s business ecosystem is much larger and more diverse than that of Northern Ireland’s, the latter enjoys a better tax system. Overall, each has its perks.
But despite a wide range of supports existing for small businesses in both Ireland and Northern Ireland, founders have consistently maintained that access to finance remains a key challenge to scaling.
The Scale Ireland ‘State of Start-ups’ survey has found the same in all of its four reports to date. Meanwhile, a Department of Enterprise, Tourism and Employment report identified a €1.1bn gap in scaling finance for Irish companies over the next two to five years.
Other challenges include regulatory complexities while dealing with revenue authorities, which might pose risks to existing and future funding rounds.
Ireland is looking to address funding issues by investigating options to unlock pension funds and institutional participation in scaling equity funds, as well as by encouraging corporate venturing in the country. While the UK is looking to unlock an additional £50bn for investment in scaling businesses.
And while the Irish Government tried addressing regulatory issues by launching a simplification project, the issue still remains, found the report.
Scaling is a challenge throughout the island, it said. To solve the issue, the report proposed closer co-operation and integration between the two business ecosystems, which it said would make the landscape more appealing to external stakeholders and improve businesses’ chances for funding.
Towards this, the report suggested discussions between Enterprise Ireland, IDA Ireland, Invest NI and InterTradeIreland on how they can work together strategically to promote the ecosystem on an all-island basis and develop a more attractive and cohesive offering to international investors.
While some stakeholders have suggested commissioning government-led studies to explore joint funding mechanisms, such as a cross-border tech seed fund that leverages incentives to stimulate investment in high-growth sectors.
In addition, the report suggested a forum with stakeholders from Ireland and Northern Ireland on an annual or bi-yearly basis. More regular feedback, knowledge and insights could be provided through this forum, it suggests.
Finally, more specific statistical data to assess the state and impact of both indigenous tech ecosystems and how they compare and interact is needed, it found.
“This report presents a strong vision for enhanced collaboration between the indigenous tech sectors in Ireland and Northern Ireland,” said CEO of Scale Ireland, Martina Fitzgerald.
“It is very clear there are opportunities for further joint funding initiatives and data collection and this can be progressed by the setting up of a Stakeholder Forum bringing together key agencies and organisations.”
Prof Brian McCaul, the CEO of QUBIS added, “This report highlights how Ireland and Northern Ireland have complementary tech ecosystems with real potential to achieve more through closer collaboration.
“By strengthening all-island cooperation we can improve access to funding, talent and international markets and build a more competitive innovation ecosystem.”
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