Conor O’Neill might have just have sparked something off in his post “How to get and Irish David Heinemeier Hansson” which was followed up by equally pragmatic post by Alan O’Rourke in “Encouraging entrepreneurship in Ireland”. In their posts they offer suggestions to foster entrepreneurship for students which is something I feel strongly about.

Conor describes a “just a job” mentality displayed by a majority of students/grads who wanted nothing more than a bank or multi-national job. Unfortunately very little options are open to those students/grads that would love to work in a start-up and develop their careers quite apart from working in large multi-nationals.

In March after attending a ShareIT event organised by Damien Mulley I sent him an email outlining my own thoughts about what could be done to help tech start-ups in Ireland and what some of the current issues were. In two sentences:

Issues: Not enough tech entrepreneurs completing cycles and re-investing within Ireland.
Fixes: “We” ourselves become the angel investors and develop a way of encouraging students in setups similar to Y-Combinator.

Unfortunately, after re-reading the email, nothing I said hasn’t already been mentioned (nearly a year and a half ago). The vital component is the ‘Brain Trust’ as Damien Mulley referred to it. As we’ve seen, despite sitting on millions, Enterprise Ireland can’t give the money away. They’re looking for the big knowledge companies to appear out of a tiny tech-startup eco-system. Damien Mulley had the first post which kicked off this conversation (in Ireland) by highlighting the fact that the traditional VC’s are facing stiffer competition from savy tech entrepreneurs often with not a lot of money, the most famous being Y-Combinator (now Seedcamp in the UK is following a similar model).

James Corbett picked up on Damien Mulleys post and wrote about “Fantasy business teams” which included references to points made by Paul O’Mahony about bloggers and programmers who could “form some sort of loosely bound structure/organisation to facilitate this kind of collaborative enterprise. With enough members we may even be able to boot strap our own ventures through membership fees”.

Personally, I think Conor O’Neills ‘Hothouse’ idea is excellent and he and Alan O’Rourke have obviously given it a bit of thought because I couldn’t add a whole lot more to what they’ve suggested. My contribution would be to echo Paul O’Mahonys point that there is possibly an entrepreneurial opportunity in helping to develop <€100K start-ups in our own community. The 'Hothouse' idea would be a great place to start - we'd be helping to develop the right environment for a start-up culture as well as giving Irish investors additional confidence in these start-ups particularly if they've essentially been peer reviewed and investment from tech entrepreneurs had already been given.

Though Joe Drumgoole might have the last word? “Populations of multi-millions trumps populations of 4 million everytime.”

Most of you have probably seen the Tourism Australia ad that has been running over the last year or two? (If you haven’t seen it already it, check it out at www.wherethebloodyhellareyou.com.) Overall, the campaign spent over 100M Euro to promote Australia using an ad culminating with a bikini-clad model stepping out of the ocean asking “Where the bloody hell are you?”

That’s the question I’d like to ask Irish tech investors and support organisations: Where bloody hell are you?

Given the enormous increase in wealth in the country its astonishing how VC’s almost avoid investing in small or medium tech companies. A lot of those with money now got it from literally ‘bricks and mortar’ investments and it’s easy to see how potentially riskier investments in start-ups could even be beyond the skill set of traditional professional investors. Why? Well, because using any measure you choose they haven’t been doing it, never mind doing it very well.

The chicken and egg situation in Ireland is that investors don’t routinely invest in tech start-ups which means fewer start-ups. Fewer start-ups mean less chance of success and, hence, increased risk. We have the people with the skills in Ireland and we have the people with the money. Why aren’t we a Silicon Valley of Europe? One difference (out of many) between Ireland and the Silicon Valley is that entrepreneurs heavily re-invest their knowledge and finances back into the system; Irish VC’s have a reputation not unlike some of their probably Nordic ancestors.

Given Ireland’s economic success over the last decade it’s not hard to believe that there has never been more wealth in the country. The policy, of successive governments, of attracting Foreign Direct Investment into the country starting more than twenty years ago has been a big factor in how Ireland developed economically. The IDA and Enterprise Ireland deservedly have been acknowledged for their part in this.

However, we have become a victim of our own success: Ireland is no longer a low-cost economy. Other countries which have studied Ireland’s past tactics have played a blinder introducing flat or low taxes to induce multinationals to invest in their lower-cost economies. Ireland’s current policies try to support developing a knowledge-based economy but, in aiming to launch 100M Euro enterprise IPOs rather than supporting small to medium size companies focusing on actual knowledge innovation, they are almost expecting too much.

So, Enterprise Ireland and Irish VC’s what should you be doing?

Just take a look at these two posts taken from TechCrunch on April 25th:
Y-Combinators European Clone
Scribd Rumoured Financing

Y-Combinator is a private investment group who invest modest amounts of money among many young entrepreneurs. It’s a simple idea: spend a small amount on lots of potentially-great ideas in the hope that one will hit the big-time. The European clone (first link) are private investors who are going to take on 8 start-ups at an initial spend of 15,000Eur (5k per person up to three people) for a total of 120K. They don’t care where you come from (within the EU) as long as you work in Austria. How much money is EI sitting on waiting to give to one of their High Potential Start-Ups? Keep waiting…

Now, look at the second link. Scribd.com, following a similar investment model, is looking at financing at around 10M dollars. That company was probably kick-started with 10-15K dollars.

Enterprise Ireland - Encourage lots of small innovative start-ups. You’ve been sitting on millions waiting for the big tech IPO which doesn’t happen all that often. Any businesses started in Ireland will more than likely end up being taxed in Ireland. Don’t be too focused on Irish nationals for that matter. Ireland is too small a country not to ignore talent from other parts of the EU. Ireland could and should be the hotbed of tech innovation in Europe.

Irish VCs - Just. Start. Looking. It doesn’t matter if you don’t invest because investment is becoming a lot more mobile, Irish companies will just go further afield to get it. The fact that you’re not even actively looking tells its own story.

Nothing in this post is either original or hasn’t been said before. It should be a no-brainer.

[Updated] - Damien Mulley has a great post about credit unions as possible funding sources. Check out the link to Joe Drumgooles posts about EI offering 175 million to Irish VC’s!