Enterprise Ireland funding applications

citylad74

Have a client who is considering some EI funding applications. I haven't done this sort of work before. After some initial correspondence with EI, they have suggested up to 10 funding programmes we should consider. My client feels we should apply for most if not all of these. I am sceptical if this is an advisable approach to take as we may look a little ragged in the eyes of EI. Any advice on the best approach here? Also, I think my client may think/hope it may be possible to obtain up to €200k funding but from what I see of EI funding, it seems to be typically at the 20-80k level & rarely above that..thanks in advance for any guidance here.

SeanFrank

EI have a fairly linear approach to funding. They want to guide you through their process of engagement beginning with the first step and ending with the last. They will change approach in rare examples, but to set the expectations, they will try to guide you down their standard path.

The first step is usually to go to a local enterprise board and see what they can do for you. They can help you in the early stages and guide you on to EI if they think you are suitable.

Remember that Ireland is packed with startups and all of them want money from EI - getting their attention in the first place is difficult.

One good way to "get on the radar" would be to get an Innovation Voucher of 5k. This takes a little effort to get but everything involving EI will. The administration effort required for EI money is always high.
http://www.enterprise-ireland.com/en/Research-Innovation/Companies/Collaborate-with-companies-research-institutes/Innovation-Voucher.shortcut.html

Other good ways to get on the radar are the accelerators like New Frontiers (EI's own accelerator program) or any of the privately owned accelerators like Wayra. EI keep an eye on everything that goes through these and you will get face time most likely.

If you are at the stage that you are booking revenue and are looking primarily to scale, there is the Competitive Start Fund, which is a 50k EI investment for 10% preference shares. (EI will never own more than 10% no matter how much money they invest)
http://www.enterprise-ireland.com/en/funding-supports/Company/HPSU-Funding/Competitive-Start-Fund-CSF-.html

One of the key advantages of the CSF is that it is the entry point for the EI HPSU (high potential startup unit). This means being assigned a development advisor and gaining access to EI's support network, which itself is a huge benefit. However, about 70 companies a year are granted CSF funds, so expect to put a lot of work into this in order to succeed; the standard is very high.

If you are a HSPU client with a DA you may also be eligible for HPSU matched funds, the highest level of investment from EI. This would grant you funding usually up to around 250k as long as you have raised the same amount (usually more in fact, "matched" doesn't reflect the reality) in private funding from a 3rd party investor.

Probably an easier way to raise some early money is to claim income tax back via the seed capital scheme. There are several ways to go about this and best bet would be to talk to an accountant who has done it before.
http://www.revenue.ie/en/tax/it/leaflets/it15.html

I hope this helps, and my final thoughts would be: getting money from EI is not easy, it is a long and laboured journey, and to rely on them from the start is to fail from the start. Consider the EI funding options as you go, but consider them options, not requirements pivotal to success.

Sean

citylad74

Thanks for your detailed response Sean Frank. I do get the impression that EI have a fairly standardised approach. The SME client I am working with will have revenues in excess of €10ml this year. I am not sure they are really interested in supports/grants of less than 50k. From what I hear, EI rarely do larger six figure supports but I am open to correction here.

SeanFrank wrote: »

EI have a fairly linear approach to funding. They want to guide you through their process of engagement beginning with the first step and ending with the last. They will change approach in rare examples, but to set the expectations, they will try to guide you down their standard path.

The first step is usually to go to a local enterprise board and see what they can do for you. They can help you in the early stages and guide you on to EI if they think you are suitable.

Remember that Ireland is packed with startups and all of them want money from EI - getting their attention in the first place is difficult.

One good way to "get on the radar" would be to get an Innovation Voucher of 5k. This takes a little effort to get but everything involving EI will. The administration effort required for EI money is always high.
http://www.enterprise-ireland.com/en/Research-Innovation/Companies/Collaborate-with-companies-research-institutes/Innovation-Voucher.shortcut.html

Other good ways to get on the radar are the accelerators like New Frontiers (EI's own accelerator program) or any of the privately owned accelerators like Wayra. EI keep an eye on everything that goes through these and you will get face time most likely.

If you are at the stage that you are booking revenue and are looking primarily to scale, there is the Competitive Start Fund, which is a 50k EI investment for 10% preference shares. (EI will never own more than 10% no matter how much money they invest)
http://www.enterprise-ireland.com/en/funding-supports/Company/HPSU-Funding/Competitive-Start-Fund-CSF-.html

One of the key advantages of the CSF is that it is the entry point for the EI HPSU (high potential startup unit). This means being assigned a development advisor and gaining access to EI's support network, which itself is a huge benefit. However, about 70 companies a year are granted CSF funds, so expect to put a lot of work into this in order to succeed; the standard is very high.

If you are a HSPU client with a DA you may also be eligible for HPSU matched funds, the highest level of investment from EI. This would grant you funding usually up to around 250k as long as you have raised the same amount (usually more in fact, "matched" doesn't reflect the reality) in private funding from a 3rd party investor.

Probably an easier way to raise some early money is to claim income tax back via the seed capital scheme. There are several ways to go about this and best bet would be to talk to an accountant who has done it before.
http://www.revenue.ie/en/tax/it/leaflets/it15.html

I hope this helps, and my final thoughts would be: getting money from EI is not easy, it is a long and laboured journey, and to rely on them from the start is to fail from the start. Consider the EI funding options as you go, but consider them options, not requirements pivotal to success.

Sean

SeanFrank

Ah, I see, that gives some good context! Well I'd say your best bet is to first try to have a Development Advisor (DA) assigned by EI. They hold monthly engagement meetings where they can begin that process if they think it suitable.

Otherwise, I'm assuming that since your client has already sought advice from an EI rep and they have responded positively to funding queries thus far, that they meet the initial criteria (internationally trading or manufacturing). If that's the case, I would agree with your client and apply for as many as possible, I don't see any risk in showing eagerness to engage with government support - if anything it shows a determination to succeed. Here are a list of SME supports if you don't already have it:
https://www.enterprise-ireland.com/en/funding-supports/Company/Esetablish-SME-Funding/

I would also say that the R&D grants are relatively accessible and that if there is any R&D (in any capacity) happening as part of the project, EI will even consider salaries for existing staff part of the overall R&D spend eligible for support. Don't hold me to that; this is second hand information that I'm picking up during my own project but I'm being advised that R&D is a great support to target early.

Anyway, hope it goes well for you and remember, EI are Europe's largest VC investor so there is plenty of support available - it just takes a good deal of red tape to get there!

Sean.

Peterdalkey

The only thing I would add to Sean's post is that EI are quite keen to get in an element of Preference shareholding in their basket. This is especially true if there is a big upside for the company in medium/longer term valuation, but it can be a great source of lowish cost working capital for some.

ontour2

€200k appears to be a general upper boundary on high potential start ups but I have seen larger investments. The investment has caps on the convertible shares, broadly speaking EI can double their money in 5 years. From my experience their motivation is growing companies and not owning a large % of the company or getting a super-normal return. Matching funding seems to be the stumbling block for many companies, basically it is easier for them to get EI to approve the investment than it is to get someone else to put in the matching 200k.

This presentation is a few years old but a good explanation of the investment process.

There is an overhead to engaging with EI. This includes business plans, filling in forms, providing financial information, meetings with DAs etc. This continues after the investment is made. If the company structure or shareholding is complex, you can spend quite a bit on solicitor fees.

EI does a lot more than investing. They have a global network with EI people in many countries that can help you to access different markets. They have resources in Dublin such as the library that you can access. They run executive education for CEOs, sales, marketing etc. They have grants for R&D and initiatives with educational institutions.

Companies experience with EI tends to vary greatly depending on the DA they are assigned. Some are highly motivated and engaged in the industry community.

A major mistake the company would make would be to try to 'take advantage' of the free or cheap money. If the EI activity works with the business plan, it can be great. If you run your business around EI initiatives you could go slight mad!