Description
During on this brief explanation in regard to economic impact of dublin business innovation centre october 2013.
Economic Impact of Dublin
Business Innovation Centre
October 2013
Economic Impact of Dublin BIC Activities
Economic Impact of Dublin BIC Activities
TABLE OF CONTENTS
EXECUTIVE SUMMARY ..................................................................................................................... I
1 INTRODUCTION ....................................................................................................................... 1
1.1 BACKGROUND ............................................................................................... 1
1.2 DUBLIN BIC ACTIVITIES ................................................................................... 2
1.3 DATA SOURCES .............................................................................................. 3
1.4 METHODOLOGY ............................................................................................. 3
1.5 REPORT STRUCTURE ....................................................................................... 4
2. OVERVIEW OF DUBLIN BIC ACTIVITIES .................................................................................... 5
2.1 INTRODUCTION .............................................................................................. 5
2.2 BRIEF HISTORY OF DUBLIN BIC ACTIVITIES ......................................................... 6
2.3 DUBLIN BIC SERVICES ..................................................................................... 8
2.4 CONCLUSIONS ............................................................................................. 16
3. ECONOMIC CONTRIBUTION OF DUBLIN BIC ......................................................................... 19
3.1 A PROFILE OF DUBLIN BIC START-UPS ............................................................ 19
3.2 FUNDING OF DUBLIN BIC START-UPS: SOURCES AND USES ................................ 20
3.3 ECONOMIC CONTRIBUTION OF DUBLIN BIC START-UPS ...................................... 22
3.4 NET ADDITIONAL ECONOMIC IMPACT OF DUBLIN BIC’S ACTIVITIES ...................... 29
3.5 CONCLUSIONS ............................................................................................. 33
4. OTHER IMPACTS OF DUBLIN BIC ACTIVITIES ......................................................................... 35
4.1 OVERALL IMPACTS OF DUBLIN BIC ACTIVITIES .................................................. 35
4.2 IMPACTS OF BUSINESS ENQUIRIES AND BUSINESS PLANNING ASSISTANCE ............. 36
4.3 IMPACTS OF INVESTOR READY PREPARATION .................................................... 38
4.4 IMPACTS OF ACCESS TO FINANCE .................................................................... 39
4.5 IMPACTS OF AFTER CARE ............................................................................... 41
4.6 IMPACTS OF GUINNESS ENTERPRISE CENTRE (GEC) ........................................... 41
4.7 LEARNINGS FROM BUSINESS FAILURES ............................................................. 43
4.8 CONCLUSIONS ............................................................................................. 44
Economic Impact of Dublin BIC Activities
LIST OF FIGURES
SUMMARY OF ECONOMIC IMPACT OF DUBLIN BIC, 2012 .................................................................... II
FIGURE 1.1: ECONOMIC IMPACT OF DUBLIN BIC ............................................................................... 4
FIGURE 2.1: 25 YEARS OF DUBLIN BIC ............................................................................................ 7
FIGURE 2.2: DUBLIN BIC SERVICES ................................................................................................ 8
FIGURE 2.3: DUBLIN BIC CLIENTS 2002-2012 ............................................................................... 12
FIGURE 2.4: DUBLIN BIC ACTIVITY FLOW 1988-2012 ...................................................................... 17
FIGURE 3.1: DUBLIN BIC START-UPS: KEY SECTORS 2003 AND 2012 ................................................... 20
FIGURE 3.2: TURNOVER DISTRIBUTION OF DKM SURVEY RESPONDENTS 2012, € .................................... 22
FIGURE 3.3: PROPORTION OF TURNOVER GENERATED BY EXPORT SALES, 2012 ...................................... 25
FIGURE 3.4: EMPLOYMENT SIZE CATEGORIES, 2012 ......................................................................... 27
FIGURE 4.1: POSITIVE IMPACTS THAT HAVE ARISEN AS A RESULT OF RESPONDENTS’ INVOLVEMENT WITH
DUBLIN BIC ........................................................................................................................... 36
FIGURE 4.2: ASSESSMENT OF DUBLIN BIC BUSINESS PLANNING ASSISTANCE ......................................... 37
FIGURE 4.3: ASSESSMENT OF DUBLIN BIC INVESTOR READY PREPARATION ........................................... 38
FIGURE 4.4: ASSESSING DUBLIN BIC SERVICES: ACCESS TO FINANCE ..................................................... 40
FIGURE 4.5: IMPORTANCE OF GUINNESS ENTERPRISE CENTRE TO THE SUCCESS OF START-UPS ..................... 42
Economic Impact of Dublin BIC Activities
LIST OF TABLES
TABLE 2.1: BUSINESS ENQUIRIES 1988-2012 .................................................................................. 9
TABLE 2.2: BUSINESS PLANNING 1988-2012 ................................................................................. 10
TABLE 2.3: START-UPS AND EXPANSIONS CREATED 1988-2012 ......................................................... 11
TABLE 2.4: HBAP DEALS COMPLETED TO YEAR END 2012 ................................................................. 14
TABLE 2.5: AIB SEED CAPITAL FUND – DUBLIN BIC MANAGED INVESTMENTS ........................................ 15
TABLE 2.6: DUBLIN BIC TOTAL INVESTMENT TO YEAR END 2012 ........................................................ 15
TABLE 2.7: KEY GEC STATISTICS .................................................................................................. 16
TABLE 3.1: RESPONDENT STATUS ................................................................................................ 19
TABLE 3.2: CAPITAL/FUNDING USED FOR ...................................................................................... 21
TABLE 3.3: BREAKDOWN OF TURNOVER, RANKED, 2012 .................................................................. 23
TABLE 3.4: DUBLIN BIC START-UP SPENDING ON ITEM/ACTIVITY, RANKED, 2012 ................................... 24
TABLE 3.5: TOTAL ECONOMIC IMPACT OF DUBLIN BIC START-UPS, 2012 .............................................. 26
TABLE 3.6: TOTAL EMPLOYMENT GENERATED BY ACTIVITIES OF DUBLIN BIC START-UPS, 2012 ................... 28
TABLE 3.7: GROSS EXCHEQUER BENEFITS ARISING FROM ACTIVITIES OF DUBLIN BIC START-UPS, 2012 ........ 29
TABLE 3.8: RATING OF RESPONDENTS’ INVOLVEMENT WITH DUBLIN BIC FOR THE SUCCESS OF THE COMPANY
........................................................................................................................................... 30
TABLE 3.9: NET ADDITIONAL ECONOMIC IMPACT DUE TO DUBLIN BIC, 2012 ......................................... 31
TABLE 3.10: NET ADDITIONAL EMPLOYMENT DUE TO DUBLIN BIC, 2012 .............................................. 31
TABLE 3.11: DUBLIN BIC IMPACT ON SURVIVAL OF BUSINESS: IF DUBLIN BIC HAD NOT BEEN AVAILABLE...... 32
TABLE 4.1: RATING OF DUBLIN BIC SERVICES (PERCENTAGE BREAKDOWN) ........................................... 41
Economic Impact of Dublin BIC Activities
This document was prepared by:
DKM Economic Consultants Ltd.,
Office 6 Grand Canal Wharf,
South Dock Road, Ringsend, Dublin 4, Ireland. Telephone: 00 353 1 6670372.
Email: [email protected]
Website: www.dkm.ie
This document is the copyright of DKM Economic Consultants.
Any unauthorised reproduction or usage by any person other than the addressee is
strictly prohibited.
ACKNOWLEDGEMENTS
This study has benefited from the generous contributions of time and
information from the respondents to the DKM Survey of Dublin BIC clients.
i
Economic Impact of Dublin BIC Activities
EXECUTIVE SUMMARY
The Dublin Business Innovation Centre (Dublin BIC) has been in operation since 1988 and has
been to the forefront in terms of entrepreneurial support in Ireland....
From the time of the first contact with an aspiring entrepreneur or enterprise, a rigorous
process of advice, evaluation and engagement takes place. The range of services covers:
? Business Planning Advice
? Access to Finance and
? Incubation Space in the Guinness Enterprise Centre
..offering a tailored one-stop service to entrepreneurs based on a core competence in
INVESTOR READY BUSINESS PLAN preparation….
Significant seed funding exists in Ireland today but it is critically important that companies are
prepared in depth when embarking on seed funding rounds. The activities and associated skills
of the Dublin BIC team have changed significantly over the years to ensure the enterprises it
advises become “investor ready” and are equipped to benefit from the funding available.
Survey responses
1
clearly indicate that companies derive significant value from the inputs of
Dublin BIC.
? 88% stated that the assistance they received in creating an Investor Ready Business
Plan was essential or very important.
? 78% viewed the Business Planning Assistance as essential or important.
Access to finance is key...
In addition to its advisory and support role, Dublin BIC also has a role in the provision of seed
capital to investor ready enterprises. It was a pioneer in the Seed Capital arena in Ireland, and
has offered access to seed and early stage venture capital to start-up companies in Ireland since
1991.
? Dublin BIC has been responsible for over €22m of funds being directly invested into 128
start-up companies up to the end of 2012.
... as is access to space
The Guinness Enterprise Centre is managed by Dublin BIC and in 2012 was occupied by 79
companies, providing 300 jobs. Since opening in 2000, 340 companies have been
accommodated there, with a total employment of over 1,000 jobs.
The info-graphic in Figure 1.1 overleaf summarises the economic impacts of Dublin BIC activities
in 2012.
1
The economic analysis in this report is based on a DKM Survey of 140 Dublin BIC assisted start-ups and enterprise
expansions. A response rate of 39% was achieved.
ii
Economic Impact of Dublin BIC Activities
SUMMARY OF ECONOMIC IMPACT OF DUBLIN BIC, 2012
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iii
Economic Impact of Dublin BIC Activities
Over the last 25 years,
? Dublin BIC has received close to 13,000 enquiries.
? Business planning assistance was provided in 4,000 cases.
? 780 business plans were completed.
? 500 start-ups were created; and
? 135 existing enterprises were supported in expanding.
Dublin BIC assisted start-ups are high-tech, innovative, and export oriented
In 2012, 61% of Dublin BIC start-ups were in the ICT sector, 17% each were engaged in
Professional, Scientific and Technical Activities and online retail, while 7% were active in the
manufacturing sector.
? They generated a total turnover of €172 million in 2012, with an average turnover of
€1.23 million
2
.
? 15% of turnover was spent or R&D in 2012
3
.
? Dublin BIC assisted start-ups exported the equivalent of 59% of their turnover in 2012
4
.
They generate high skill employment, ...
50.4% of turnover was spent on payroll, employing 2,500 persons in 2012, 68% of whom were
graduates. The average employment per firm was 17.
? The indirect and induced employment impacts add an additional 2,032 jobs in the
economy which are created due to the activities of Dublin BIC start-ups.
? In total, Dublin BIC assisted start-ups contributed 4,460 FTE positions in 2012 alone. The
implied employment multiplier is 2, which means that for every job created by Dublin
BIC companies, an additional job is created in the rest of the economy.
... and make a significant contribution to the Irish economy
The estimated economic impact of the turnover generated by Dublin BIC start-ups in 2012 was
€229 million.
? This implies an economic multiplier of 1.33. This means that for every additional €1
injected into the economy by Dublin BIC’s start-ups, the Irish economy benefits to the
tune of €1.33.
? It is estimated that the gross Exchequer benefit arising from the activities of Dublin BIC
start-ups amounted to €60 million in 2012 alone. This compares to the €1.1 million
annual Exchequer contribution to Dublin BIC.
The outlook is very optimistic
Dublin BIC assisted start-ups benefit from having undergone a rigorous process in getting
investor ready: Over the past decade, a survival rate of 82% was achieved
5
.
2
This compares to €336,000 for Irish ICT companies with less than 10 employees.
3
This compares to just 0.9% for comparable small sized companies in Ireland in 2011.
4
This compares very favourably with an industrial average of 47% for micro firms and 26% for small firms (less than
20 employees) in 2011.
5
This compares to a 61% five year survival rate for all Irish start-up companies (CSO Business Demography).
iv
Economic Impact of Dublin BIC Activities
? Companies reported a positive outlook with respect to their expected turnover, R&D
spending and employment . 91% of the companies expect turnover to increase and 93%
expect employment to increase over the next 12 months.
Dublin BIC’s net additional impact is significant
Based on information provided by respondents surveyed by DKM we estimate for 2012 alone:
?
The net economic impact of Dublin BIC activities was €152 million.
? A total of 1,600 jobs in Dublin BIC start-ups (plus an additional 1,350 indirect and
induced jobs in the wider economy) were due to Dublin BIC’s activities.
In addition, Dublin BIC makes a very significant contribution to entrepreneurship in the high
tech-start-up arena,
Companies stated that their contact with Dublin BIC:
? Improved their entrepreneurship and business acumen
? Improved leadership and management skills
? Provided valuable introductions to business networks
? Helped realise financial independence
1
Economic Impact of Dublin BIC Activities
1 INTRODUCTION
1.1 BACKGROUND
As the Irish economy enters the next phase of its economic development, the key challenge is
building an economy which has enterprise, exports and innovation at its core. Entrepreneurship
and start-up companies are central to meeting this challenge over the coming years. An
innovation and knowledge based economy requires an environment which encourages the
development of new ideas and facilitates the growth and expansion of new businesses. The
most recent Global Entrepreneurship Report for Ireland
6
estimated that 19,000 individuals set
up new businesses in 2012 and highlighted the findings that new business start-ups are
increasingly innovative and that the majority expect to find customers in export markets.
The difficult economic environment of the past five years has also put job creation firmly at the
centre of Government policy. The two Action Plans for Jobs
7
published to date have set out a
range of measures to support sustainable job creation. Specifically in regard to
entrepreneurship, the 2013 Action Plan for Jobs recognises the importance of a supportive
business environment for start-up companies, both for indigenous and overseas entrepreneurs
keen to start a business in Ireland. At the centre of the drive towards entrepreneurship is the
development of Ireland as
“….. the ‘go to’ place to start a business”
(2013 Action Plan for Jobs, page 86)
Progress is being made in this regard and a number of supports have been put in place by
Government and the State agencies to ensure that start-up companies in Ireland which are
innovation led and with the potential to grow and employ more people receive the necessary
support to contribute to economic growth. These have included a series of new non-bank
sources of finance, including micro-finance funding, Angel, Seed and Venture Funds which
underpin the availability of private equity, an important source of funding for early stage start-
up companies.
Fostering an entrepreneurial culture and encouraging risk-taking also involves putting in place a
range of non-financial supports to help new business start-ups scale and grow their business. As
well as access to funding, such supports include assisting entrepreneurs evaluate their business
ideas, advising on business planning and development; assisting in investor ready business plan
preparation and providing incubation space and ongoing business mentoring on all aspects of
their business.
The Dublin Business Innovation Centre (Dublin BIC) has been actively working with private
sector state agencies investors and partners to nurture hi-tech knowledge based start-ups since
its foundation in 1988. Fostering businesses that are market, business and innovation led, the
Dublin BIC provides the full range of supports required by new business projects, including
access to seed capital to selected enterprises.
6
http://www.forfas.ie/publications/2013/title,10905,en.php
7
Action Plan for Jobs, 2012 and 2013, Department of Jobs, Enterprise and Innovation.http://www.djei.ie
2
Economic Impact of Dublin BIC Activities
The European Business and Innovation Centres (BICs) are regionally and locally based
organisations involved in the identification, selection and specialist support for new and existing
enterprises. Dublin BIC is a licensed full member of EBN, The European Business Network.
Dublin BIC is a member of the Association of European Business and Innovation Centres in
Ireland, together with Cork BIC, South East Area BIC and West BIC.
Dublin BIC operates as a public-private partnership, combining both Government funding via
Enterprise Ireland and private funding as well as in-kind contributions. In Ireland, Exchequer
support is provided by the Department of Jobs, Enterprise and Innovation under the NDP
Productive Sector Operational Programme 2007-2013, and is managed by Enterprise Ireland.
To mark its 25
th
year of operation, Dublin BIC commissioned DKM Economic Consultants to
undertake an Economic Impact Analysis of the full range of its activities, as outlined below. This
study sets out to ascertain the contribution to the Irish economy of the enterprises assisted by
Dublin BIC and the net contribution of Dublin BIC itself, in the past decade, with a particular
focus on 2012, the last year for which full records are available.
1.2 DUBLIN BIC ACTIVITIES
Dublin BIC is involved in four main areas of activity which are set out below.
1. Direct Business Advice
Dublin BIC’s core competency is in investor ready preparation for hi-tech internationally
traded knowledge based start-ups. Typically this engagement takes place with entrepreneurs
who have some early proof of concept and are seeking to raise first round funding. Dublin BIC
consultants are highly qualified and can share real world knowledge with the entrepreneur.
Utilising their extensive knowledge and depth of experience, they ensure that the entrepreneur
is challenged during the process of developing and completing an investor ready business plan,
strategic review and pitching, through to assisting them in the fundraising process.
Dublin BIC, in partnership with Enterprise Ireland, also delivers the Enterprisestart2 programme
to very early stage entrepreneurs. The core focus of Enterprisestart2 is on clarifying the market
opportunity with particular emphasis on articulating the value proposition.
2. Guinness Enterprise Centre (GEC)
The GEC is managed by Dublin BIC, provides a dynamic environment to build and scale high
potential businesses, combining office space with business support services in a connected
network of entrepreneurs, high growth companies, investors and support agencies.
3. Halo Business Angel Partnership (HBAP)
The Halo Business Angel Partnership (HBAP) is a joint initiative between Enterprise Ireland,
InterTrade Ireland and the Irish Business and Innovation Centres, managed by Dublin BIC. HBAP
matches private investors with pre-screened investment opportunities in promising enterprises
at an early stage of development. These investors bring business experience in addition to
financial resources. The Halo Business Angel Partnership is now recognised as one of the top
three performing Angel groups in Europe.
3
Economic Impact of Dublin BIC Activities
4. AIB Seed Capital Fund
Dublin BIC is co-fund manager of the €53 million AIB Seed Capital Fund. The Fund invests in Irish
start-up and early stage enterprises with high growth potential across a range of sectors
including information technology/web/mobile, telecommunications, renewable energy, medical
devices, industrial technology and consumer products.
1.3 DATA SOURCES
The analysis contained in this report is based on three data sources:
1. Primary Research: DKM Survey of Dublin BIC assisted start-ups and business expansions.
Using the web-based survey tool, SurveyMonkey
8
, a detailed questionnaire was sent to 140
organisations which had received Dublin BIC assistance over the last decade and were reported
as start-ups or enterprise expansions by Dublin BIC. In total, 54 responses were received, giving
a response rate of 39%. Responses were received from a representative cross-section of Dublin
BIC’s client base. Grossing up to this total current start-up base will be applied where
appropriate and instructive.
2. Dublin BIC corporate information and client surveys.
3. CSO Business Demography, Industry Surveys and other published literature and data.
1.4 METHODOLOGY
The economic impacts of Dublin BIC manifest themselves through a number of channels:
? The Spending Effects of the start-ups and business expansions that Dublin BIC helped to
launch relate to the economic activity created by these enterprises. They find their
expression in employment, value added and Exchequer benefits.
? The Dynamic Effects arise out of the impact of Dublin BIC activities on
entrepreneurship, innovation, competitiveness and investment activity. They are
important, but much more difficult to enumerate. The DKM Survey included questions
which aimed to gauge the importance and value of these “soft” outcomes to the
entrepreneurs who engaged with Dublin BIC during their start-up journeys. These will
be presented and discussed in the report.
8
https://www.surveymonkey.com/
4
Economic Impact of Dublin BIC Activities
Figure 1.1: ECONOMIC IMPACT OF DUBLIN BIC
Source: DKM, Dublin BIC
1.5 REPORT STRUCTURE
This report summarises DKM’s research and is structured as follows:
Section 2 gives an overview of Dublin BIC activities.
Section 3 sets out the performance of Dublin BIC assisted start-ups and business
expansions by category and sector and estimates their economic contribution.
Dublin BIC’s net economic contribution is presented.
Section 4 describes the dynamic effects of Dublin BIC’s activities.
5
Economic Impact of Dublin BIC Activities
2. OVERVIEW OF DUBLIN BIC ACTIVITIES
This Section gives a description of Dublin BIC’s service offering over the past 25 years and its
evolution to an organisation whose core competence is in “Investor Ready Preparation” for
early stage entrepreneurs.
2.1 INTRODUCTION
Over the 25 years of its existence, the economic environment in which Dublin BIC has operated
has changed dramatically. The period of low growth of the late 1980s, followed by the supply
shocks of the early 1990s, gave way to the heady days of the Celtic Tiger and its subsequent
demise. The drivers of economic activity also changed, resulting in an over reliance on a
domestic economy fuelled by a construction bubble. In line with wider economic developments,
Government policy priorities have had to change in response to this evolving landscape.
This is reflected in the developments at Dublin BIC over
the past 25 years, as well as in the mix of entrepreneurs
who approach the organisation. Dublin BIC’s focus and
range of supports has changed considerably and has
evolved to respond and meet the changing needs of the
start-up marketplace for high growth and export led
companies.
In particular, Dublin BIC has been on a transformative journey over the past ten years.
Significant seed funding now exists for start-ups via a combination of public and private sources
and it is critically important that companies are prepared in depth when embarking on seed
funding rounds. The funding available through a combination of Seed Venture Capital
9
and
Business Angel finance
10
is perfectly aligned with Dublin BIC’s core competence in “Investor
Ready Preparation”. Dublin BIC works in partnership with the Enterprise Ireland High Potential
Start-Up (HPSU) division and deals with over 50% of the HPSU companies in the greater Dublin
region on an annual basis.
There has been a step change in the level and quality of inputs required to prepare companies
to source seed funding rounds in today's ultra competitive marketplace. The activities and
associated skill sets of the Dublin BIC team have changed significantly over recent years in
response to these changed seed funding needs of its clients.
In particular, Dublin BIC has developed strong capabilities in supporting internationally traded
start-ups including in the following areas:
? Strategic Marketing / Business Development Capability
? Product & Technology knowledge/capability across an increasingly complex spectrum of
start-ups
9
Dublin BIC via its management of the AIB Seed Capital Fund has completed over 37 investments.
10
Dublin BIC via its management of the Halo Business Angel Partnership, has supported over 100 companies receiving
business angel investments.
Dublin BIC’s core competence:
Investor Ready Preparation
6
Economic Impact of Dublin BIC Activities
? Strategic Funding Capability: assistance to clients to identify true funding needs (the
skills herein are analogous to that of a boutique corporate finance entity specialising in
internationally traded start-ups)
? Management Team Development: Capability in identifying the breadth of management
capability required and supporting management development and key hiring decisions
? In-depth set of market Relationships across: Legal, Accounting & Advisory spheres
2.2 BRIEF HISTORY OF DUBLIN BIC ACTIVITIES
Dublin BIC was formed in 1987/88 with support from the EU, Dublin Chamber of Commerce and
local private, public and higher education sectors to assist the creation and development of
enterprise and innovation in the greater Dublin region by providing practical support and
assistance to entrepreneurs and new and young enterprises with the potential for growth.
Dublin BIC was one of the first ever private public partnerships formed in Ireland, to assist
enterprise development and has strongly supported the economic growth and performance of
the region over the past two decades.
Dublin BIC led the way in partnership with its stakeholders with a number of first to market
initiatives in terms of entrepreneurial support, including:
? 1991 Launched Ireland’s First Seed Capital Fund, the €1.2m Irish
Business Innovation Fund
? 1996 Established €5m Dublin Seed Capital Fund
? 2000 Opened the Guinness Enterprise Centre
? 2005 Dublin BIC forms Halo Business Angel Partnership (HBAP)
? 2007 Partners in the €30m AIB Seed Capital Fund
? 2012 HBAP closes its 100
th
Business Angel deal
? 2013 Launches “The Bridge” at the Guinness Enterprise Centre
11
Dublin BIC’s Mission Statement declares the following intentions:
“The Dublin BIC assists and provides advice, access to finance and incubation space to
new innovative business projects. Dublin BIC acts as an advocate to the entrepreneur in
finding practical solutions to problems in a responsive, non-bureaucratic way. These
activities complement and interlink with the assistance and services provided by the
State agencies and the private sector.”
12
The following graphic summarises the historical development of Dublin BIC over the past 25
years.
11
The Bridge is a partnership with Ballyfermot College and Dublin BIC to help bridge the gap for 13
selected graduates from education to the animation industry.
12
Dublin Business Innovation Centre, September 2012
Dublin BIC Mission Statement
7
Economic Impact of Dublin BIC Activities
Figure 2.1: 25 YEARS OF DUBLIN BIC
Source: Dublin BIC
1988
•Dublin BIC starts private public partnership to support start-ups
•Dublin BIC launches Dublin Investor Register Service and business plan competition
1990
•Dublin BIC arranges entrepreneur pitches for investor groups
1991
•Ireland's first seed capital fund launched - €1 m Business Innovation Fund
1994
•Dublin BIC forms planning partnership for enterprise centre
•Dublin BIC accredited EBN 'Best Practice' in Business Support Provision
1996
•Dublin BIC launches €5 m Dublin Seed Capital Fund
1997
•Planning for 6,000m
2
Guinness Enterprise Centre commences
2000
•Guinness Enterprise Centre opens - 43 projects
2001
•Dublin BIC named European Commission Incubation Advisor
2004
•High potential start-up co-operation agreement between Enterprise Ireland and
Dublin BIC
2005
•Dublin BIC forms Halo Angel Partnership initiative
•HP Micro Enterprise Acceleration Programme launched by Dublin BIC
2007
•Dublin BIC partners in €30 m AIB Seed Capital Fund
2009
•AIB Seed Capital Fund increases to €53 m
2012
•Halo Business Angel Partnership €35.6 m invested in 100 companies
2013
•Dublin BIC celebrates 25
th
birthday
•Initiates doubling of enterprise space at the Guinness Enterprise Centre
8
Economic Impact of Dublin BIC Activities
2.3 DUBLIN BIC SERVICES
2.3.1 Introduction
Dublin BIC provides a one-stop support facility which aims to assist a wide range of clients at
different stages of development. Dublin BIC accompanies entrepreneurs through the various
start-up stages and continues to assist the business through the first three to five years where
appropriate. The Dublin BIC range of services can be grouped as shown in the diagram below.
Figure 2.2: DUBLIN BIC SERVICES
Dublin BIC Range of Services
€53m AIB Seed
Capital Fund
Halo Business
Angel
Partnership
Guinness
Enterprise
Centre
Consultant led
Investor Ready
Business Plan
Preparation -
an integral part of
knowledge intensive
start-up landscape
Services include:
• Business Planning Advice
• Access to Finance through the AIB Seed Capital Fund, Halo Business Angel
Partnership
• After Care
• New Market Entry Strategic Guidance
• Business Expansion Assistance
• Provision of high quality, high tech incubation space in the Guinness Enterprise
Centre
From the time of the first contact with an aspiring entrepreneur or enterprise, a rigorous
process of advice, evaluation and engagement takes place. If the indications are that the project
might be viable and the entrepreneur will benefit from the detailed handholding support Dublin
BIC can provide, then a specific engagement is agreed and this is documented between the
client and Dublin BIC.
9
Economic Impact of Dublin BIC Activities
It is important to note that:
Dublin BIC classifies a company as a start-up when it is trading regularly and in Dublin BIC’s
opinion has a sustainable business model that means it has a good chance of surviving and
prospering.
Dublin BIC will only engage intensely with a prospective entrepreneur if it is felt that support
from Dublin BIC can add value to the entrepreneur. The process is an iterative one to help
accelerate the idea and concept further by providing intense business plan support thus giving
the entrepreneur the best chance of achieving a successful outcome.
Below, the Dublin BIC’s services are described in more detail and the key outcomes are
presented.
2.3.2 Business Planning Advice
Investor Ready Preparation
Dublin BIC’s core competence and unique differentiator is the ability to provide intensive
handholding support to the CEO/founder of start-up through a process called “Investor ready
preparation”. This investor ready focus is strategically aligned with EU policy. There is growing
acknowledgement at European policy level of the critical importance of investor ready
preparation so that companies can make optimum use of funds raised. This was acknowledged
by European Commission Vice President for Industry and Entrepreneurship, Mr Antonio Tajani
during the recent SME Finance Forum.
13
Business Enquiries
Dublin BIC receives on average of 500 enquiries every year from entrepreneurs with a potential
business idea. These enquiries come from a combination of sources, direct enquiries to Dublin
BIC, referrals from Enterprise Ireland, County Enterprise Boards, third level institutions, legal
firms, accountancy practices and banks.
93% of Dublin BIC enquiries are in connection with a potential project. Dublin BIC works in
partnership with Enterprise Ireland on multiple levels, for example, Dublin BIC directly supports
Enterprise Ireland and its High Potential Start-Up (HSPU) pipeline specifically in terms of
Investor Ready Preparation.
Table 2.1: BUSINESS ENQUIRIES 1988-2012
Total Annual Average
Total Number of Enquiries 12,752 510
Less Non-Projects
14
899 36
Project Level Enquiries 11,853 474
Source: Dublin BIC
13
Hosted in Dublin on 2
nd
May 2013 as part of the Irish EU Presidencyhttp://europa.eu/rapid/press-release_SPEECH-
13-381_en.htm
14
General enquiries which can be dealt with over the telephone or which need to be referred elsewhere.
Dublin BIC’s ‘start-up’ definition
Dublin BIC handled 13,000
enquiries over past 25
years
10
Economic Impact of Dublin BIC Activities
? Many of the enquiries received are domestic service based businesses and would be
referred by Dublin BIC to the most appropriate supports available in the marketplace.
? A subset of these enquiries has the potential to be internationally traded businesses and
these are engaged with fully by Dublin BIC from concept to start-up and beyond.
It is important to note the role of Dublin BIC’s consultants in helping challenge entrepreneurs to
accelerate their business idea and develop a sound commercially viable proposition, as they
progress their business from concept to start-up and beyond. This is most effective when the
entrepreneur is fully engaged in the process. We will return to discussing these important but
unquantifiable “soft” impacts of Dublin BIC’s activities in Section 4.
Business Planning Assistance
Entrepreneurs are assisted in identifying their core business offering, evaluating their skills,
identifying any skill gaps and are challenged to validate the market opportunity through
engaging directly with their target market i.e. prospective customers. Particular emphasis is
placed on strategic marketing to help identify the product/market fit, as well as marketing,
finance, technology and the management team involved in the new venture.
Dublin BIC has developed a business planning guide which provides a business plan model along
with explanations, advice and tips for writing the best plan for entrepreneurs at an early stage
of development.
Between 1988 and 2012, close to 4,000 entrepreneurs/business propositions were given such
business planning assistance, leading to 772 completed business plans. Often entrepreneurs
who have started up businesses previously come back to Dublin BIC with new business ideas,
typically these would be serial entrepreneurs who may have successfully exited a previous start-
up company and come back to Dublin BIC with another new venture idea.
Table 2.2: BUSINESS PLANNING 1988-2012
Total
Annual
Average
Business Planning Assistance 3,929 157
Business Plans Completed 772 31
Source: Dublin BIC
Enterprisestart2 (ES2)
Dublin BIC in partnership with Enterprise Ireland also delivers the ES2 programme targeted at
very early stage potential start-ups. Participants
15
at this six week programme are at
idea/concept stage and seek to establish if their idea is commercially viable, scalable and has
export potential. Via a combination of consultant led and peer feedback the participants self-
select how to proceed, leading to a number of outcomes:
? The entrepreneur may decide not to pursue entrepreneurship as a viable option for
them at this time.
15
Over 30 participants per year.
4,000 business propositions
were given business Planning
Assistance
800 business plans were
completed
11
Economic Impact of Dublin BIC Activities
632 start-ups and
expansions created
over 25 years, which
employed close to
2,500 at the start-up
stage
? Participants may be a referred to other supports from either the County Enterprise
Board or to the relevant Enterprise Ireland support.
? A small subset will progress to detailed engagement with Dublin BIC when they get to
the stage of requiring Investor Ready preparation support usually and have secured
Enterprise Ireland High Potential Start-up status.
2.3.3 Start-ups
As outlined previously, under Dublin BIC’s definition of a start-up, a company needs to be
trading regularly and in Dublin BIC’s opinion have a sustainable business model that means it
has a good chance of surviving and prospering.
The employment count of 2,500 new jobs created as shown in the Table below relates to the
year the companies were reported as a Dublin BIC start-up or business expansion and in most
cases, the cumulative employment total would be a multiple of the start-up staff size after years
of trading. We will return to this point in Section 3.
Table 2.3: START-UPS AND EXPANSIONS CREATED 1988-2012
Source: Dublin BIC
14% of these jobs (337) were created between 2010 and 2012 alone.
It is important to note that employment numbers for companies at this early stage are typically
low until they begin to expand and develop. Some of these start-ups have been very successful
in scaling up their activities and are growing significant revenues and providing significant
employment.
Total Annual
Average
New Start-ups Created 497 20
Existing Start-ups/Expansions 135 5
Total Number of Companies 632 25
Employment in new Start-ups 1,318 53
Employment in Existing Start-ups/Expansions 1,167 47
Cumulative Employment at Start-up Stage 2,485 99
Over the past 25 years, Dublin BIC has assisted in creating close to 500 new
enterprises, having brought them from pre-start stage through to start-up and
beyond.
In addition, 135 existing start-ups received advice and funding to expand their
operations (business expansions).
12
Economic Impact of Dublin BIC Activities
Survival Rates of Dublin BIC Start-ups and Business Expansions
Survival rates of Dublin BIC start-ups and business expansions have historically been high.
Independent surveys conducted in 2004 and 2009 showed that 80% of Dublin BIC assisted start-
ups survive their critical first five years.
A DKM analysis of Dublin BIC’s data over the last decade showed similar results. Out of a total of
189 Dublin BIC start-ups and business expansions over the ten year period, 34 companies were
recorded as having failed by the end of 2012, giving a total survival rate of 82%
16
.
Figure 2.3: DUBLIN BIC CLIENTS 2002-2012
Source: Dublin BIC
2.3.4 After Care
Dublin BIC continues to work with clients to help them accelerate past their formation stage and
provides a number of services which are described briefly below.
? Access to Second/Third Round Investment
? New Market Entry Strategy
? Strategic Business Development Advice
? Through Dublin BIC’s relationship with MBA Schools including UCD Smurfit School, TCD
and Thunderbird School of Management USA, start-up companies are linked with MBA
teams to carry out a specific project e.g. formulate a New Market Entry Strategy.
International Partnership & Technology Transfer Assistance
The International Technology and Transfer Programme provides access to the local, regional
and European network of BICs, which offers assistance to early-stage start-up companies in
accessing international markets and opens routes to trading overseas to them.
16
The CSO’s Business Demography gives a five year survival rate of 61% for companies “born” in 2006. This is not
strictly comparable with the Dublin BIC statistics, as the year of incorporation is not taken into account.
Survival
82%
Failures
18%
82% survival rate for
Dublin BIC companies
13
Economic Impact of Dublin BIC Activities
2.3.5 Access to Finance
Access to funding (risk capital) is one of the primary concerns of, and is of crucial importance to
early stage start-up companies. In Ireland there is an active risk capital market for start-ups
which comprises State (primarily through Enterprise Ireland) and seed and early stage venture
capital funding (though venture capital funds and private individuals/angel investors), and other
financial institutions (bank debt).
Dublin BIC has a successful track record of investing in start-up and early stage companies in
Ireland, having:
• Over 25 years of investment and fund management experience in Dublin;
• Specialist knowledge in deal structure and finance strategies for leveraging funding
sources;
• Access to funding from multiple sources including public and private sectors;
• A deep first hand understanding of funding issues facing early stage start-ups /
entrepreneurs;
• Aftercare service for business development and investment strategies for future
fundraising.
Dublin BIC utilises this extensive knowledge, hands-on experience and expertise with companies
to ensure that their approach to all sources of finance / funding is targeted, appropriate and
addresses key information needs. The investor ready preparation process challenges the
company through the development of an investor business plan. The different layers of support
include the underlying core competence in Investor Ready preparation for hi-tech
internationally trade start-ups which clearly positions Dublin BIC in the marketplace.
In addition to this advisory and support role, Dublin BIC also has a role in the provision of seed
capital to investor ready enterprises. Dublin BIC is a full member of the Irish and European
Venture Capital Associations (IVCA and EVCA) and is regulated by the Central Bank of Ireland.
Dublin BIC, as part of the Irish Business Innovation Centres, was a pioneer in the Seed Capital
arena in Ireland, in the provision of seed and early stage venture capital to start-up companies,
through three venture capital funds:
• £1m punt Irish BICs Seed Capital Fund in 1991 (closed)
• £4m punt Dublin Seed Capital Fund (1998-2006) (closed)
• €53m AIB Seed Capital Fund 2007 (open)
Dublin Seed Capital Fund (DSCF)
This fund was operational between 1998 and 2006. It was established by Dublin BIC with
support from private sector companies and Enterprise Ireland through the EU Seed Capital
Measure of the Operational Programme for Industrial Development 1994-1999. It is briefly
described below
17
:
Fund Amount €4.6m
? Term of Fund: 8 years (from 1998 to 2006)
? Number of Investments: 36
? Average Investment Amount: €125,000
17
Source: Dublin BIC
Dublin BIC is a full
member of the IVCA
and EVCA
DSCF invested €4.6m
between 1998 and 2006
14
Economic Impact of Dublin BIC Activities
HBAP invested €11m in 53
projects in Dublin/Leinster
area, leveraging €17m
Dublin Investor Register Service (DIRS)
The Dublin Investor Register Service was formed by the Dublin BIC in the late 1990s to
stimulate increased direct investment in local industry by providing a channel and contact point
for both potential investors and businesses seeking equity funds.
Halo Business Angel Partnership (HBAP)
Initiated in 2005, the Halo Business Angel Partnership is a joint initiative between Enterprise
Ireland, InterTradeIreland and the Irish Business and Innovation Centres. It has offices in Dublin,
Waterford, Cork and Galway and is managed by Dublin BIC.
HBAP matches private investors with pre-screened investment opportunities in start-up, early
stage and developing businesses. The investors bring business experience as well as financial
resources. Dublin BIC facilitates by arranging initial meetings between the parties and providing
support throughout the fund raising process.
Table 2.4: HBAP DEALS
18
COMPLETED TO YEAR END 2012
€'000
HBAP Deals 10,659
Other funds leveraged 17,448
Number of deals 53
Source: Dublin BIC
? 53 projects have been invested to date in Dublin/Leinster area.
? The €10.7 million in Angel Funding leveraged additional funds to the value of over €17.5
million, bringing the total investment to €28.2million, an overall leverage of 2.6.
? The average Business Angel investment in Dublin/Leinster to date has been €201,000.
AIB Seed Capital Fund
The AIB Seed Capital Fund was established in 2007 under the Seed and Venture Capital
Programme 2007-2012 as a joint venture between Enterprise Ireland and AIB Bank who
between them committed €53 million to the Fund. The Fund’s investments are jointly managed
by Dublin BIC and Enterprise Equity Venture Capital (EEVC)
19
. The Fund invests in Irish start-up
and early stage enterprises with high growth potential across a range of sectors including
information technology/web/mobile, telecommunications, renewable energy, medical devices,
industrial technology and consumer products.
Dublin BIC evaluates and manages all investments within the city and county of Dublin when the
initial investment amount required from the Fund does not exceed €250,000, while Enterprise
Equity concentrates on investments in the rest of Ireland and on investments in excess of
€250,000. The Fund has the ability to invest up to a total of €1.5 million in companies through
multiple investment rounds.
18
Definition of "Deal": Investors have invested money into company, legal documents complete and money in the
bank.
19
http://www.aibseedcapitalfund.ie/
15
Economic Impact of Dublin BIC Activities
The following table summarises Dublin BIC’s activity in relation to the Fund. Between 2008 and
2012
20
, 39 investments totalling €7.4 million were made. When leveraged funding from other
sources is included, a total investment round of €28 million was achieved, which represents an
overall leverage of 3.8 times. The average investment size was just under €190,000.
Table 2.5: AIB SEED CAPITAL FUND – DUBLIN BIC MANAGED INVESTMENTS
Year No of
Investments
Investment
Amount €000
Investment
Round €000
21
2008 8 1,592 5,420
2009 6 1,175 5,352
2010 3 650 1,850
2011 8 1,400 4,835
2012 14 2,577 10,430
Total 2008-2012
22
39 7,394 27,887
Source: Dublin BIC
The following table summarises the financing of early stage companies and start- ups facilitated
by Dublin BIC.
Table 2.6: DUBLIN BIC TOTAL INVESTMENT TO YEAR END 2012
Fund
€million
Additional Leveraged Funds
€million
Total Number of
Investments
Business Angels 10.7 17.5 53
AIB Seed Capital Fund 7.4 27.9 39
Source: Dublin BIC
When combined with the €4.6 million in 36 investments that the Dublin Seed Capital Fund
contributed between 1998 and 2006, it emerges that since its foundation:
2.3.6 Access to Space
The Guinness Enterprise Centre (GEC) was an initiative of Dublin BIC established in partnership
with Diageo, Dublin City Council, Dublin City Enterprise Board, Enterprise Ireland and the
Guinness Workers’ Employment Fund
23
. Its mission is to provide incubation space ranging from
10m² to 160m² to new and established small businesses, primarily in software services oriented
businesses, international/technological traded services, Ecommerce, multi-media, internet and
20
In the year to 31
st
August 2013, 7 investments totalling €1.1 million were made, resulting in total funding of €5.2
million.
21
Including leveraged funds
22
39 investments including 2
nd
round investments in 29 companies.
23
Dublin BIC, manager of GEC and the founding stakeholders were supported by Allied Irish Bank, FAS, Eircom, Smart
and Cable and Wireless.
Dublin BIC has been responsible for €22.7m of funds being directly
invested into over 100 projects up to the end of 2012.
AIBSCF invested
€7.4m
in 39 projects,
leveraging to total
investments of
€28m
16
Economic Impact of Dublin BIC Activities
mobile software development. It was opened in 2000 and, in line with international experience,
aims to accelerate the growth and success of start-up companies through an array of business
support resources and services, including:
? 6,000m
2
of flexible space
? Access to finance
? Business Advisory Support
? Common services and Clusters
? Networking connections.
The GEC is managed by Dublin BIC and is a fundamental part of the operational infrastructure of
both the Dublin BIC and the Dublin City Enterprise Board/Dublin City Council Local Enterprise
Office).
? In 2012 there were 79 enterprises located in the GEC, providing 300 jobs.
? This is an occupation rate of 90%.
? Since the opening of the incubation space, 340 companies have been accommodated
there, providing over 1,000 jobs directly and an estimated additional 1,000 support
jobs
24
.
? The AIB Seed Capital Fund and the Halo Business Angels Partnership (described above)
are both also located in the GEC. This co-location with major funders of start-up
companies, together with Dublin BIC management provides the tenants with access to
potential funding and business development advice for selected projects.
Table 2.7: KEY GEC STATISTICS
2012
Average incubation time (years) 4
Current occupancy rate % 90
Number of enterprises in GEC 79
Employment accommodated in GEC 302
Total number of occupant companies since opening of GEC 340
Total number of jobs 1,010
Source: Dublin BIC
The GEC is one of the leading enterprise centres in Europe with continued growth in the number
and quality of clients and their employees. This is against the turbulent economic backdrop and
existing competiton and significant new competition in the SME facility space.
2.4 CONCLUSIONS
Dublin BIC offers a one-stop service to advance potential business ideas to a stage where they
can be considered as High Potential Start-Ups (HPSU). Its integrated services bundle comprises
business consultancy, access to finance, workshops and seminars as well as enterprise space.
24
Source: Dublin BIC
Since 2000, 340
companies have
provided 1,000
jobs in the GEC
17
Economic Impact of Dublin BIC Activities
Dublin BIC’s key competency lies in getting potential start-ups to a stage where they are
“investor ready”. Entrepreneurs are prepared in depth before embarking on seed funding
rounds.
Dublin BIC has pioneered the Seed Capital Initiative in Ireland. It currently manages the Halo
Business Angel Partnership and co-manages the AIB Seed Capital Fund.
Dublin BIC has been responsible for over €22 million of funds being directly invested into over
100 start-up companies up to the end of 2012.
The Guinness Enterprise Centre is an initiative of Dublin BIC and has provided flexible office
space, shared services and networking opportunities to 340 enterprises since it opened its doors
in 2000. It has accommodated over 1,000 workers since then. The co-location with the AIB seed
Capital Fund and the Halo Angels Partnership provides entrepreneurs with access to potential
funding and business development advice.
The following chart summarises Dublin BIC’s activities over the past 25 years:
Figure 2.4: DUBLIN BIC ACTIVITY FLOW 1988-2012
Source: Dublin BIC
The economic impact of the full range of Dublin BIC activities is the focus of this report and will
be covered in the next Section.
18
Economic Impact of Dublin BIC Activities
19
Economic Impact of Dublin BIC Activities
3. ECONOMIC CONTRIBUTION OF DUBLIN BIC
As shown above, over the 25 years of its existence, Dublin BIC has been involved in the
formation and/or expansion of 632 enterprises, referred to as start-ups in the remainder of this
report.
25
. Some of these enterprises have grown into significant players in their respective fields
and employ over 200 people, while others are micro companies employing less than 10
workers.
This Section sets out to estimate the economic contribution of
Dublin BIC and the companies it assisted. The analysis is based
largely on the results of a DKM Survey
26
of start-ups and
expansions which have received assistance from Dublin BIC over
the years, focussing in particular on the last decade. Moreover,
the financial information collected from survey participants
relates to the latest current year, which in all but one case was
2012. Therefore, the economic impact of the start-ups assisted
by Dublin BIC over the past decade can only be estimated with
any degree of certainty for 2012. Clearly, the accumulated
impact of Dublin BIC start-ups would be a multiple of this, but
cannot be enumerated with the available information.
In addition, it is important to note that at any one time, Dublin BIC is assisting an average of 70
pre-start-up companies, many of which are already trading and contributing to the economy,
but have not yet met all the criteria to be regarded as a start-up by Dublin BIC. Thus, their
contributions are not included in this study.
3.1 A PROFILE OF DUBLIN BIC START-UPS
3.1.1 DKM Survey Respondents: Current Status
Of the 54 companies which completed the questionnaire, 98% were private limited companies
and 2% described themselves as “dissolved”. The next Table gives the survey respondents’
current status.
Table 3.1: RESPONDENT STATUS
Status (%)
SME - growth stage 47.1
Early Stage Company 39.2
Start-up Company 7.8
Working elsewhere 3.9
Entrepreneur seeking seed investment 2.0
Entrepreneur seeking advice and training to get investor ready 0.0
Total 100.0
Source: DKM Survey (n=51)
All respondents’ companies were incorporated between 1999 and 2010, with the largest
proportion in the more recent years (2008 - 13% and 2010 - 15%).
25
497 start-ups and 135 expansions of existing enterprises.
26
For description of survey, please see Section 1.
Economic impact
focussing on companies
assisted by Dublin BIC in
the last decade
Results in this section are
for 2012
20
Economic Impact of Dublin BIC Activities
3.1.2 Industrial Sectors
The change in the economic landscape over the 25 years of Dublin BIC’s operation can be
illustrated by the changes in the industrial sectors
27
into which Dublin BIC start-ups can be
categorised.
? In 2003, Professional, Scientific and Technical Activities (PSTA) made up 75% of start-
ups.
? However, by 2012 Information and Communication Technology (ICT) had grown to be
the most important sector, accounting for 61%.
? Online Retailing and PSTA both accounted for 17% of companies in 2012.
Figure 3.1: DUBLIN BIC START-UPS: KEY SECTORS 2003 AND 2012
Source: Dublin BIC
This is in line with the changes in the wider economy, where the number of ICT companies with
less than 10 employees has increased by 14% over the last six years to 2011.
28
3.2 FUNDING OF DUBLIN BIC START-UPS: SOURCES AND USES
The average amount in funds raised as disclosed by recipients was close to €470,000. As would
be expected, there was a wide variation around this average.
The following funding sources were identified and are listed below in order of frequency:
? Enterprise Ireland
? Private external investors
? Private internal investors
? AIB Seed Capital Fund
? Bank debt e.g. term loans
27
As defined by NACE codes.
28
CSO (2013), Business Demography 2011, latest figures available.
8%
0% 0%
75%
17%
5%
17%
61%
17%
0%
Manufacture
Online Retail
ICT
Professional,
Scientific, Technical
Activities
Admin & Support
Activities
2012
2003
61% of start-ups in
ICT sector
21
Economic Impact of Dublin BIC Activities
Export market expansion
(64%),
product development (62%),
and
additional employment
(56%)
were most important uses
for capital raised
? Other venture capital funds
? Halo Business Angel Partnership
? Dublin Seed Capital Fund
The funding that Dublin BIC assisted start-ups are able to attract is in turn used to leverage a
multiple of additional funds, which often only become accessible due to the success in the
original Dublin BIC induced round, as has been shown in Section 2.
Use of Funding
The funding secured was primarily used to fund export expansion, product development and
employment growth as the following table illustrates.
Table 3.2: CAPITAL/FUNDING USED FOR
%
Export market entry development/expansion 64.4
Product development (and Research & Development) 62.2
Additional employment 55.6
Development of business idea / Proof of concept 42.2
Capital expenditure 17.8
Other 11.1
New premises 4.4
Source: DKM Survey (n=45), more than one use of funding could be identified.
? There was a strong export emphasis to the use of funds with 64% stating that they used
funding to develop or expand exports.
? 62% used it for product development and 56% used the funding to create further
employment in their firms.
? 42% of respondents used the funding to develop a business idea.
? 18% put it towards capital expenditure.
? 4% purchased new premises.
? A further 11% of respondents identified ‘other’ uses for the funding they received.
Among these uses were sales pipeline development, marketing activities and funding of
cash flow.
Export Markets Identified by Dublin BIC Start-ups
29
Respondents who identified ‘Export market entry development/expansion’ as a reason for
obtaining funding were asked to identify these. The majority of respondents received funding in
order to develop or expand their export operations in the UK or the US.
? 64% of respondents identified the UK market.
? 39% identified the US market.
? The rest of Europe was the third most popular response with
32% of respondents identifying it as an export market
earmarked for entry development or expansion.
29
More than one export market could be identified.
64% of Dublin BIC
start-ups targeting
UK export market
22
Economic Impact of Dublin BIC Activities
3.3 ECONOMIC CONTRIBUTION OF DUBLIN BIC START-UPS
3.3.1 Turnover of Dublin BIC Start-ups
In regard to turnover in 2012
30
,
? 30% of respondents to the DKM Survey had an annual turnover range of between
€250,000 and €500,000.
? 28% had turnover that was lower than that
? 30% fell into the range between €500,000 and €2 million.
? The remaining 12% had incomes over €2 million.
Figure 3.2: TURNOVER DISTRIBUTION OF DKM SURVEY RESPONDENTS 2012, €
Source: DKM Survey (n=50)
Based on the reported turnover categories, the estimated turnover of the survey respondents
was €61.3 million in 2012, giving an average turnover of €1.23 million.
This is significantly higher than the average turnover of €336,000 reported for micro enterprises
in the ICT sector in Ireland in 2011.
31
Expectations for Future Turnover
Survey respondents were very optimistic about their future turnover:
? 91% of respondents expected their turnover to increase over the next 12 months;
? Only 2% expected a fall; and
? 7% anticipated no change.
30
Or the latest year available.
31
CSO (2013) Annual Services Inquiry 2011http://www.cso.ie/en/releasesandpublications/er/asi/annualservicesinquiry2011/#.Ukv434brwRs
Grossing up to the total survey population gives a total estimated turnover
of €172 million in 2012 for the start-ups and expansions that Dublin BIC
helped create in the past decade.
Average turnover of
€1.23 m in 2012
Total turnover of
€172 m in 2012
23
Economic Impact of Dublin BIC Activities
3.3.2 Expenditure by Dublin BIC Start-ups
When asked to provide a breakdown of their expenditure
32
, survey respondents disclosed that
in 2012, 50% of their turnover went on total payroll (including PAYE, PRSI, USI etc.), while 15%
was spent on funding research and development (R&D).
Table 3.3: BREAKDOWN OF TURNOVER, RANKED, 2012
Spending on:
Total Payroll 50.4%
R&D Expenditure 14.5%
Inputs Purchased (Materials) 10.8%
Sales/Marketing Costs 6.6%
Other Taxation (VAT) 4.7%
General Office Costs (Rent/Rates/Utilities) 3.7%
Capital Spending (IT Equipment, Machines,
Buildings, Vehicles etc.)
3.6%
Contracted Professional Services (auditors, legal) 1.6%
Other 4.1%
Total 100.0%
Source: DKM Survey (n=37)
This is a very high R&D intensity. By comparison, the proportion of turnover spent on R&D by
small sized companies in Ireland (
During on this brief explanation in regard to economic impact of dublin business innovation centre october 2013.
Economic Impact of Dublin
Business Innovation Centre
October 2013
Economic Impact of Dublin BIC Activities
Economic Impact of Dublin BIC Activities
TABLE OF CONTENTS
EXECUTIVE SUMMARY ..................................................................................................................... I
1 INTRODUCTION ....................................................................................................................... 1
1.1 BACKGROUND ............................................................................................... 1
1.2 DUBLIN BIC ACTIVITIES ................................................................................... 2
1.3 DATA SOURCES .............................................................................................. 3
1.4 METHODOLOGY ............................................................................................. 3
1.5 REPORT STRUCTURE ....................................................................................... 4
2. OVERVIEW OF DUBLIN BIC ACTIVITIES .................................................................................... 5
2.1 INTRODUCTION .............................................................................................. 5
2.2 BRIEF HISTORY OF DUBLIN BIC ACTIVITIES ......................................................... 6
2.3 DUBLIN BIC SERVICES ..................................................................................... 8
2.4 CONCLUSIONS ............................................................................................. 16
3. ECONOMIC CONTRIBUTION OF DUBLIN BIC ......................................................................... 19
3.1 A PROFILE OF DUBLIN BIC START-UPS ............................................................ 19
3.2 FUNDING OF DUBLIN BIC START-UPS: SOURCES AND USES ................................ 20
3.3 ECONOMIC CONTRIBUTION OF DUBLIN BIC START-UPS ...................................... 22
3.4 NET ADDITIONAL ECONOMIC IMPACT OF DUBLIN BIC’S ACTIVITIES ...................... 29
3.5 CONCLUSIONS ............................................................................................. 33
4. OTHER IMPACTS OF DUBLIN BIC ACTIVITIES ......................................................................... 35
4.1 OVERALL IMPACTS OF DUBLIN BIC ACTIVITIES .................................................. 35
4.2 IMPACTS OF BUSINESS ENQUIRIES AND BUSINESS PLANNING ASSISTANCE ............. 36
4.3 IMPACTS OF INVESTOR READY PREPARATION .................................................... 38
4.4 IMPACTS OF ACCESS TO FINANCE .................................................................... 39
4.5 IMPACTS OF AFTER CARE ............................................................................... 41
4.6 IMPACTS OF GUINNESS ENTERPRISE CENTRE (GEC) ........................................... 41
4.7 LEARNINGS FROM BUSINESS FAILURES ............................................................. 43
4.8 CONCLUSIONS ............................................................................................. 44
Economic Impact of Dublin BIC Activities
LIST OF FIGURES
SUMMARY OF ECONOMIC IMPACT OF DUBLIN BIC, 2012 .................................................................... II
FIGURE 1.1: ECONOMIC IMPACT OF DUBLIN BIC ............................................................................... 4
FIGURE 2.1: 25 YEARS OF DUBLIN BIC ............................................................................................ 7
FIGURE 2.2: DUBLIN BIC SERVICES ................................................................................................ 8
FIGURE 2.3: DUBLIN BIC CLIENTS 2002-2012 ............................................................................... 12
FIGURE 2.4: DUBLIN BIC ACTIVITY FLOW 1988-2012 ...................................................................... 17
FIGURE 3.1: DUBLIN BIC START-UPS: KEY SECTORS 2003 AND 2012 ................................................... 20
FIGURE 3.2: TURNOVER DISTRIBUTION OF DKM SURVEY RESPONDENTS 2012, € .................................... 22
FIGURE 3.3: PROPORTION OF TURNOVER GENERATED BY EXPORT SALES, 2012 ...................................... 25
FIGURE 3.4: EMPLOYMENT SIZE CATEGORIES, 2012 ......................................................................... 27
FIGURE 4.1: POSITIVE IMPACTS THAT HAVE ARISEN AS A RESULT OF RESPONDENTS’ INVOLVEMENT WITH
DUBLIN BIC ........................................................................................................................... 36
FIGURE 4.2: ASSESSMENT OF DUBLIN BIC BUSINESS PLANNING ASSISTANCE ......................................... 37
FIGURE 4.3: ASSESSMENT OF DUBLIN BIC INVESTOR READY PREPARATION ........................................... 38
FIGURE 4.4: ASSESSING DUBLIN BIC SERVICES: ACCESS TO FINANCE ..................................................... 40
FIGURE 4.5: IMPORTANCE OF GUINNESS ENTERPRISE CENTRE TO THE SUCCESS OF START-UPS ..................... 42
Economic Impact of Dublin BIC Activities
LIST OF TABLES
TABLE 2.1: BUSINESS ENQUIRIES 1988-2012 .................................................................................. 9
TABLE 2.2: BUSINESS PLANNING 1988-2012 ................................................................................. 10
TABLE 2.3: START-UPS AND EXPANSIONS CREATED 1988-2012 ......................................................... 11
TABLE 2.4: HBAP DEALS COMPLETED TO YEAR END 2012 ................................................................. 14
TABLE 2.5: AIB SEED CAPITAL FUND – DUBLIN BIC MANAGED INVESTMENTS ........................................ 15
TABLE 2.6: DUBLIN BIC TOTAL INVESTMENT TO YEAR END 2012 ........................................................ 15
TABLE 2.7: KEY GEC STATISTICS .................................................................................................. 16
TABLE 3.1: RESPONDENT STATUS ................................................................................................ 19
TABLE 3.2: CAPITAL/FUNDING USED FOR ...................................................................................... 21
TABLE 3.3: BREAKDOWN OF TURNOVER, RANKED, 2012 .................................................................. 23
TABLE 3.4: DUBLIN BIC START-UP SPENDING ON ITEM/ACTIVITY, RANKED, 2012 ................................... 24
TABLE 3.5: TOTAL ECONOMIC IMPACT OF DUBLIN BIC START-UPS, 2012 .............................................. 26
TABLE 3.6: TOTAL EMPLOYMENT GENERATED BY ACTIVITIES OF DUBLIN BIC START-UPS, 2012 ................... 28
TABLE 3.7: GROSS EXCHEQUER BENEFITS ARISING FROM ACTIVITIES OF DUBLIN BIC START-UPS, 2012 ........ 29
TABLE 3.8: RATING OF RESPONDENTS’ INVOLVEMENT WITH DUBLIN BIC FOR THE SUCCESS OF THE COMPANY
........................................................................................................................................... 30
TABLE 3.9: NET ADDITIONAL ECONOMIC IMPACT DUE TO DUBLIN BIC, 2012 ......................................... 31
TABLE 3.10: NET ADDITIONAL EMPLOYMENT DUE TO DUBLIN BIC, 2012 .............................................. 31
TABLE 3.11: DUBLIN BIC IMPACT ON SURVIVAL OF BUSINESS: IF DUBLIN BIC HAD NOT BEEN AVAILABLE...... 32
TABLE 4.1: RATING OF DUBLIN BIC SERVICES (PERCENTAGE BREAKDOWN) ........................................... 41
Economic Impact of Dublin BIC Activities
This document was prepared by:
DKM Economic Consultants Ltd.,
Office 6 Grand Canal Wharf,
South Dock Road, Ringsend, Dublin 4, Ireland. Telephone: 00 353 1 6670372.
Email: [email protected]
Website: www.dkm.ie
This document is the copyright of DKM Economic Consultants.
Any unauthorised reproduction or usage by any person other than the addressee is
strictly prohibited.
ACKNOWLEDGEMENTS
This study has benefited from the generous contributions of time and
information from the respondents to the DKM Survey of Dublin BIC clients.
i
Economic Impact of Dublin BIC Activities
EXECUTIVE SUMMARY
The Dublin Business Innovation Centre (Dublin BIC) has been in operation since 1988 and has
been to the forefront in terms of entrepreneurial support in Ireland....
From the time of the first contact with an aspiring entrepreneur or enterprise, a rigorous
process of advice, evaluation and engagement takes place. The range of services covers:
? Business Planning Advice
? Access to Finance and
? Incubation Space in the Guinness Enterprise Centre
..offering a tailored one-stop service to entrepreneurs based on a core competence in
INVESTOR READY BUSINESS PLAN preparation….
Significant seed funding exists in Ireland today but it is critically important that companies are
prepared in depth when embarking on seed funding rounds. The activities and associated skills
of the Dublin BIC team have changed significantly over the years to ensure the enterprises it
advises become “investor ready” and are equipped to benefit from the funding available.
Survey responses
1
clearly indicate that companies derive significant value from the inputs of
Dublin BIC.
? 88% stated that the assistance they received in creating an Investor Ready Business
Plan was essential or very important.
? 78% viewed the Business Planning Assistance as essential or important.
Access to finance is key...
In addition to its advisory and support role, Dublin BIC also has a role in the provision of seed
capital to investor ready enterprises. It was a pioneer in the Seed Capital arena in Ireland, and
has offered access to seed and early stage venture capital to start-up companies in Ireland since
1991.
? Dublin BIC has been responsible for over €22m of funds being directly invested into 128
start-up companies up to the end of 2012.
... as is access to space
The Guinness Enterprise Centre is managed by Dublin BIC and in 2012 was occupied by 79
companies, providing 300 jobs. Since opening in 2000, 340 companies have been
accommodated there, with a total employment of over 1,000 jobs.
The info-graphic in Figure 1.1 overleaf summarises the economic impacts of Dublin BIC activities
in 2012.
1
The economic analysis in this report is based on a DKM Survey of 140 Dublin BIC assisted start-ups and enterprise
expansions. A response rate of 39% was achieved.
ii
Economic Impact of Dublin BIC Activities
SUMMARY OF ECONOMIC IMPACT OF DUBLIN BIC, 2012
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n
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i
o
n
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o
i
n
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e
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”
iii
Economic Impact of Dublin BIC Activities
Over the last 25 years,
? Dublin BIC has received close to 13,000 enquiries.
? Business planning assistance was provided in 4,000 cases.
? 780 business plans were completed.
? 500 start-ups were created; and
? 135 existing enterprises were supported in expanding.
Dublin BIC assisted start-ups are high-tech, innovative, and export oriented
In 2012, 61% of Dublin BIC start-ups were in the ICT sector, 17% each were engaged in
Professional, Scientific and Technical Activities and online retail, while 7% were active in the
manufacturing sector.
? They generated a total turnover of €172 million in 2012, with an average turnover of
€1.23 million
2
.
? 15% of turnover was spent or R&D in 2012
3
.
? Dublin BIC assisted start-ups exported the equivalent of 59% of their turnover in 2012
4
.
They generate high skill employment, ...
50.4% of turnover was spent on payroll, employing 2,500 persons in 2012, 68% of whom were
graduates. The average employment per firm was 17.
? The indirect and induced employment impacts add an additional 2,032 jobs in the
economy which are created due to the activities of Dublin BIC start-ups.
? In total, Dublin BIC assisted start-ups contributed 4,460 FTE positions in 2012 alone. The
implied employment multiplier is 2, which means that for every job created by Dublin
BIC companies, an additional job is created in the rest of the economy.
... and make a significant contribution to the Irish economy
The estimated economic impact of the turnover generated by Dublin BIC start-ups in 2012 was
€229 million.
? This implies an economic multiplier of 1.33. This means that for every additional €1
injected into the economy by Dublin BIC’s start-ups, the Irish economy benefits to the
tune of €1.33.
? It is estimated that the gross Exchequer benefit arising from the activities of Dublin BIC
start-ups amounted to €60 million in 2012 alone. This compares to the €1.1 million
annual Exchequer contribution to Dublin BIC.
The outlook is very optimistic
Dublin BIC assisted start-ups benefit from having undergone a rigorous process in getting
investor ready: Over the past decade, a survival rate of 82% was achieved
5
.
2
This compares to €336,000 for Irish ICT companies with less than 10 employees.
3
This compares to just 0.9% for comparable small sized companies in Ireland in 2011.
4
This compares very favourably with an industrial average of 47% for micro firms and 26% for small firms (less than
20 employees) in 2011.
5
This compares to a 61% five year survival rate for all Irish start-up companies (CSO Business Demography).
iv
Economic Impact of Dublin BIC Activities
? Companies reported a positive outlook with respect to their expected turnover, R&D
spending and employment . 91% of the companies expect turnover to increase and 93%
expect employment to increase over the next 12 months.
Dublin BIC’s net additional impact is significant
Based on information provided by respondents surveyed by DKM we estimate for 2012 alone:
?
The net economic impact of Dublin BIC activities was €152 million.
? A total of 1,600 jobs in Dublin BIC start-ups (plus an additional 1,350 indirect and
induced jobs in the wider economy) were due to Dublin BIC’s activities.
In addition, Dublin BIC makes a very significant contribution to entrepreneurship in the high
tech-start-up arena,
Companies stated that their contact with Dublin BIC:
? Improved their entrepreneurship and business acumen
? Improved leadership and management skills
? Provided valuable introductions to business networks
? Helped realise financial independence
1
Economic Impact of Dublin BIC Activities
1 INTRODUCTION
1.1 BACKGROUND
As the Irish economy enters the next phase of its economic development, the key challenge is
building an economy which has enterprise, exports and innovation at its core. Entrepreneurship
and start-up companies are central to meeting this challenge over the coming years. An
innovation and knowledge based economy requires an environment which encourages the
development of new ideas and facilitates the growth and expansion of new businesses. The
most recent Global Entrepreneurship Report for Ireland
6
estimated that 19,000 individuals set
up new businesses in 2012 and highlighted the findings that new business start-ups are
increasingly innovative and that the majority expect to find customers in export markets.
The difficult economic environment of the past five years has also put job creation firmly at the
centre of Government policy. The two Action Plans for Jobs
7
published to date have set out a
range of measures to support sustainable job creation. Specifically in regard to
entrepreneurship, the 2013 Action Plan for Jobs recognises the importance of a supportive
business environment for start-up companies, both for indigenous and overseas entrepreneurs
keen to start a business in Ireland. At the centre of the drive towards entrepreneurship is the
development of Ireland as
“….. the ‘go to’ place to start a business”
(2013 Action Plan for Jobs, page 86)
Progress is being made in this regard and a number of supports have been put in place by
Government and the State agencies to ensure that start-up companies in Ireland which are
innovation led and with the potential to grow and employ more people receive the necessary
support to contribute to economic growth. These have included a series of new non-bank
sources of finance, including micro-finance funding, Angel, Seed and Venture Funds which
underpin the availability of private equity, an important source of funding for early stage start-
up companies.
Fostering an entrepreneurial culture and encouraging risk-taking also involves putting in place a
range of non-financial supports to help new business start-ups scale and grow their business. As
well as access to funding, such supports include assisting entrepreneurs evaluate their business
ideas, advising on business planning and development; assisting in investor ready business plan
preparation and providing incubation space and ongoing business mentoring on all aspects of
their business.
The Dublin Business Innovation Centre (Dublin BIC) has been actively working with private
sector state agencies investors and partners to nurture hi-tech knowledge based start-ups since
its foundation in 1988. Fostering businesses that are market, business and innovation led, the
Dublin BIC provides the full range of supports required by new business projects, including
access to seed capital to selected enterprises.
6
http://www.forfas.ie/publications/2013/title,10905,en.php
7
Action Plan for Jobs, 2012 and 2013, Department of Jobs, Enterprise and Innovation.http://www.djei.ie
2
Economic Impact of Dublin BIC Activities
The European Business and Innovation Centres (BICs) are regionally and locally based
organisations involved in the identification, selection and specialist support for new and existing
enterprises. Dublin BIC is a licensed full member of EBN, The European Business Network.
Dublin BIC is a member of the Association of European Business and Innovation Centres in
Ireland, together with Cork BIC, South East Area BIC and West BIC.
Dublin BIC operates as a public-private partnership, combining both Government funding via
Enterprise Ireland and private funding as well as in-kind contributions. In Ireland, Exchequer
support is provided by the Department of Jobs, Enterprise and Innovation under the NDP
Productive Sector Operational Programme 2007-2013, and is managed by Enterprise Ireland.
To mark its 25
th
year of operation, Dublin BIC commissioned DKM Economic Consultants to
undertake an Economic Impact Analysis of the full range of its activities, as outlined below. This
study sets out to ascertain the contribution to the Irish economy of the enterprises assisted by
Dublin BIC and the net contribution of Dublin BIC itself, in the past decade, with a particular
focus on 2012, the last year for which full records are available.
1.2 DUBLIN BIC ACTIVITIES
Dublin BIC is involved in four main areas of activity which are set out below.
1. Direct Business Advice
Dublin BIC’s core competency is in investor ready preparation for hi-tech internationally
traded knowledge based start-ups. Typically this engagement takes place with entrepreneurs
who have some early proof of concept and are seeking to raise first round funding. Dublin BIC
consultants are highly qualified and can share real world knowledge with the entrepreneur.
Utilising their extensive knowledge and depth of experience, they ensure that the entrepreneur
is challenged during the process of developing and completing an investor ready business plan,
strategic review and pitching, through to assisting them in the fundraising process.
Dublin BIC, in partnership with Enterprise Ireland, also delivers the Enterprisestart2 programme
to very early stage entrepreneurs. The core focus of Enterprisestart2 is on clarifying the market
opportunity with particular emphasis on articulating the value proposition.
2. Guinness Enterprise Centre (GEC)
The GEC is managed by Dublin BIC, provides a dynamic environment to build and scale high
potential businesses, combining office space with business support services in a connected
network of entrepreneurs, high growth companies, investors and support agencies.
3. Halo Business Angel Partnership (HBAP)
The Halo Business Angel Partnership (HBAP) is a joint initiative between Enterprise Ireland,
InterTrade Ireland and the Irish Business and Innovation Centres, managed by Dublin BIC. HBAP
matches private investors with pre-screened investment opportunities in promising enterprises
at an early stage of development. These investors bring business experience in addition to
financial resources. The Halo Business Angel Partnership is now recognised as one of the top
three performing Angel groups in Europe.
3
Economic Impact of Dublin BIC Activities
4. AIB Seed Capital Fund
Dublin BIC is co-fund manager of the €53 million AIB Seed Capital Fund. The Fund invests in Irish
start-up and early stage enterprises with high growth potential across a range of sectors
including information technology/web/mobile, telecommunications, renewable energy, medical
devices, industrial technology and consumer products.
1.3 DATA SOURCES
The analysis contained in this report is based on three data sources:
1. Primary Research: DKM Survey of Dublin BIC assisted start-ups and business expansions.
Using the web-based survey tool, SurveyMonkey
8
, a detailed questionnaire was sent to 140
organisations which had received Dublin BIC assistance over the last decade and were reported
as start-ups or enterprise expansions by Dublin BIC. In total, 54 responses were received, giving
a response rate of 39%. Responses were received from a representative cross-section of Dublin
BIC’s client base. Grossing up to this total current start-up base will be applied where
appropriate and instructive.
2. Dublin BIC corporate information and client surveys.
3. CSO Business Demography, Industry Surveys and other published literature and data.
1.4 METHODOLOGY
The economic impacts of Dublin BIC manifest themselves through a number of channels:
? The Spending Effects of the start-ups and business expansions that Dublin BIC helped to
launch relate to the economic activity created by these enterprises. They find their
expression in employment, value added and Exchequer benefits.
? The Dynamic Effects arise out of the impact of Dublin BIC activities on
entrepreneurship, innovation, competitiveness and investment activity. They are
important, but much more difficult to enumerate. The DKM Survey included questions
which aimed to gauge the importance and value of these “soft” outcomes to the
entrepreneurs who engaged with Dublin BIC during their start-up journeys. These will
be presented and discussed in the report.
8
https://www.surveymonkey.com/
4
Economic Impact of Dublin BIC Activities
Figure 1.1: ECONOMIC IMPACT OF DUBLIN BIC
Source: DKM, Dublin BIC
1.5 REPORT STRUCTURE
This report summarises DKM’s research and is structured as follows:
Section 2 gives an overview of Dublin BIC activities.
Section 3 sets out the performance of Dublin BIC assisted start-ups and business
expansions by category and sector and estimates their economic contribution.
Dublin BIC’s net economic contribution is presented.
Section 4 describes the dynamic effects of Dublin BIC’s activities.
5
Economic Impact of Dublin BIC Activities
2. OVERVIEW OF DUBLIN BIC ACTIVITIES
This Section gives a description of Dublin BIC’s service offering over the past 25 years and its
evolution to an organisation whose core competence is in “Investor Ready Preparation” for
early stage entrepreneurs.
2.1 INTRODUCTION
Over the 25 years of its existence, the economic environment in which Dublin BIC has operated
has changed dramatically. The period of low growth of the late 1980s, followed by the supply
shocks of the early 1990s, gave way to the heady days of the Celtic Tiger and its subsequent
demise. The drivers of economic activity also changed, resulting in an over reliance on a
domestic economy fuelled by a construction bubble. In line with wider economic developments,
Government policy priorities have had to change in response to this evolving landscape.
This is reflected in the developments at Dublin BIC over
the past 25 years, as well as in the mix of entrepreneurs
who approach the organisation. Dublin BIC’s focus and
range of supports has changed considerably and has
evolved to respond and meet the changing needs of the
start-up marketplace for high growth and export led
companies.
In particular, Dublin BIC has been on a transformative journey over the past ten years.
Significant seed funding now exists for start-ups via a combination of public and private sources
and it is critically important that companies are prepared in depth when embarking on seed
funding rounds. The funding available through a combination of Seed Venture Capital
9
and
Business Angel finance
10
is perfectly aligned with Dublin BIC’s core competence in “Investor
Ready Preparation”. Dublin BIC works in partnership with the Enterprise Ireland High Potential
Start-Up (HPSU) division and deals with over 50% of the HPSU companies in the greater Dublin
region on an annual basis.
There has been a step change in the level and quality of inputs required to prepare companies
to source seed funding rounds in today's ultra competitive marketplace. The activities and
associated skill sets of the Dublin BIC team have changed significantly over recent years in
response to these changed seed funding needs of its clients.
In particular, Dublin BIC has developed strong capabilities in supporting internationally traded
start-ups including in the following areas:
? Strategic Marketing / Business Development Capability
? Product & Technology knowledge/capability across an increasingly complex spectrum of
start-ups
9
Dublin BIC via its management of the AIB Seed Capital Fund has completed over 37 investments.
10
Dublin BIC via its management of the Halo Business Angel Partnership, has supported over 100 companies receiving
business angel investments.
Dublin BIC’s core competence:
Investor Ready Preparation
6
Economic Impact of Dublin BIC Activities
? Strategic Funding Capability: assistance to clients to identify true funding needs (the
skills herein are analogous to that of a boutique corporate finance entity specialising in
internationally traded start-ups)
? Management Team Development: Capability in identifying the breadth of management
capability required and supporting management development and key hiring decisions
? In-depth set of market Relationships across: Legal, Accounting & Advisory spheres
2.2 BRIEF HISTORY OF DUBLIN BIC ACTIVITIES
Dublin BIC was formed in 1987/88 with support from the EU, Dublin Chamber of Commerce and
local private, public and higher education sectors to assist the creation and development of
enterprise and innovation in the greater Dublin region by providing practical support and
assistance to entrepreneurs and new and young enterprises with the potential for growth.
Dublin BIC was one of the first ever private public partnerships formed in Ireland, to assist
enterprise development and has strongly supported the economic growth and performance of
the region over the past two decades.
Dublin BIC led the way in partnership with its stakeholders with a number of first to market
initiatives in terms of entrepreneurial support, including:
? 1991 Launched Ireland’s First Seed Capital Fund, the €1.2m Irish
Business Innovation Fund
? 1996 Established €5m Dublin Seed Capital Fund
? 2000 Opened the Guinness Enterprise Centre
? 2005 Dublin BIC forms Halo Business Angel Partnership (HBAP)
? 2007 Partners in the €30m AIB Seed Capital Fund
? 2012 HBAP closes its 100
th
Business Angel deal
? 2013 Launches “The Bridge” at the Guinness Enterprise Centre
11
Dublin BIC’s Mission Statement declares the following intentions:
“The Dublin BIC assists and provides advice, access to finance and incubation space to
new innovative business projects. Dublin BIC acts as an advocate to the entrepreneur in
finding practical solutions to problems in a responsive, non-bureaucratic way. These
activities complement and interlink with the assistance and services provided by the
State agencies and the private sector.”
12
The following graphic summarises the historical development of Dublin BIC over the past 25
years.
11
The Bridge is a partnership with Ballyfermot College and Dublin BIC to help bridge the gap for 13
selected graduates from education to the animation industry.
12
Dublin Business Innovation Centre, September 2012
Dublin BIC Mission Statement
7
Economic Impact of Dublin BIC Activities
Figure 2.1: 25 YEARS OF DUBLIN BIC
Source: Dublin BIC
1988
•Dublin BIC starts private public partnership to support start-ups
•Dublin BIC launches Dublin Investor Register Service and business plan competition
1990
•Dublin BIC arranges entrepreneur pitches for investor groups
1991
•Ireland's first seed capital fund launched - €1 m Business Innovation Fund
1994
•Dublin BIC forms planning partnership for enterprise centre
•Dublin BIC accredited EBN 'Best Practice' in Business Support Provision
1996
•Dublin BIC launches €5 m Dublin Seed Capital Fund
1997
•Planning for 6,000m
2
Guinness Enterprise Centre commences
2000
•Guinness Enterprise Centre opens - 43 projects
2001
•Dublin BIC named European Commission Incubation Advisor
2004
•High potential start-up co-operation agreement between Enterprise Ireland and
Dublin BIC
2005
•Dublin BIC forms Halo Angel Partnership initiative
•HP Micro Enterprise Acceleration Programme launched by Dublin BIC
2007
•Dublin BIC partners in €30 m AIB Seed Capital Fund
2009
•AIB Seed Capital Fund increases to €53 m
2012
•Halo Business Angel Partnership €35.6 m invested in 100 companies
2013
•Dublin BIC celebrates 25
th
birthday
•Initiates doubling of enterprise space at the Guinness Enterprise Centre
8
Economic Impact of Dublin BIC Activities
2.3 DUBLIN BIC SERVICES
2.3.1 Introduction
Dublin BIC provides a one-stop support facility which aims to assist a wide range of clients at
different stages of development. Dublin BIC accompanies entrepreneurs through the various
start-up stages and continues to assist the business through the first three to five years where
appropriate. The Dublin BIC range of services can be grouped as shown in the diagram below.
Figure 2.2: DUBLIN BIC SERVICES
Dublin BIC Range of Services
€53m AIB Seed
Capital Fund
Halo Business
Angel
Partnership
Guinness
Enterprise
Centre
Consultant led
Investor Ready
Business Plan
Preparation -
an integral part of
knowledge intensive
start-up landscape
Services include:
• Business Planning Advice
• Access to Finance through the AIB Seed Capital Fund, Halo Business Angel
Partnership
• After Care
• New Market Entry Strategic Guidance
• Business Expansion Assistance
• Provision of high quality, high tech incubation space in the Guinness Enterprise
Centre
From the time of the first contact with an aspiring entrepreneur or enterprise, a rigorous
process of advice, evaluation and engagement takes place. If the indications are that the project
might be viable and the entrepreneur will benefit from the detailed handholding support Dublin
BIC can provide, then a specific engagement is agreed and this is documented between the
client and Dublin BIC.
9
Economic Impact of Dublin BIC Activities
It is important to note that:
Dublin BIC classifies a company as a start-up when it is trading regularly and in Dublin BIC’s
opinion has a sustainable business model that means it has a good chance of surviving and
prospering.
Dublin BIC will only engage intensely with a prospective entrepreneur if it is felt that support
from Dublin BIC can add value to the entrepreneur. The process is an iterative one to help
accelerate the idea and concept further by providing intense business plan support thus giving
the entrepreneur the best chance of achieving a successful outcome.
Below, the Dublin BIC’s services are described in more detail and the key outcomes are
presented.
2.3.2 Business Planning Advice
Investor Ready Preparation
Dublin BIC’s core competence and unique differentiator is the ability to provide intensive
handholding support to the CEO/founder of start-up through a process called “Investor ready
preparation”. This investor ready focus is strategically aligned with EU policy. There is growing
acknowledgement at European policy level of the critical importance of investor ready
preparation so that companies can make optimum use of funds raised. This was acknowledged
by European Commission Vice President for Industry and Entrepreneurship, Mr Antonio Tajani
during the recent SME Finance Forum.
13
Business Enquiries
Dublin BIC receives on average of 500 enquiries every year from entrepreneurs with a potential
business idea. These enquiries come from a combination of sources, direct enquiries to Dublin
BIC, referrals from Enterprise Ireland, County Enterprise Boards, third level institutions, legal
firms, accountancy practices and banks.
93% of Dublin BIC enquiries are in connection with a potential project. Dublin BIC works in
partnership with Enterprise Ireland on multiple levels, for example, Dublin BIC directly supports
Enterprise Ireland and its High Potential Start-Up (HSPU) pipeline specifically in terms of
Investor Ready Preparation.
Table 2.1: BUSINESS ENQUIRIES 1988-2012
Total Annual Average
Total Number of Enquiries 12,752 510
Less Non-Projects
14
899 36
Project Level Enquiries 11,853 474
Source: Dublin BIC
13
Hosted in Dublin on 2
nd
May 2013 as part of the Irish EU Presidencyhttp://europa.eu/rapid/press-release_SPEECH-
13-381_en.htm
14
General enquiries which can be dealt with over the telephone or which need to be referred elsewhere.
Dublin BIC’s ‘start-up’ definition
Dublin BIC handled 13,000
enquiries over past 25
years
10
Economic Impact of Dublin BIC Activities
? Many of the enquiries received are domestic service based businesses and would be
referred by Dublin BIC to the most appropriate supports available in the marketplace.
? A subset of these enquiries has the potential to be internationally traded businesses and
these are engaged with fully by Dublin BIC from concept to start-up and beyond.
It is important to note the role of Dublin BIC’s consultants in helping challenge entrepreneurs to
accelerate their business idea and develop a sound commercially viable proposition, as they
progress their business from concept to start-up and beyond. This is most effective when the
entrepreneur is fully engaged in the process. We will return to discussing these important but
unquantifiable “soft” impacts of Dublin BIC’s activities in Section 4.
Business Planning Assistance
Entrepreneurs are assisted in identifying their core business offering, evaluating their skills,
identifying any skill gaps and are challenged to validate the market opportunity through
engaging directly with their target market i.e. prospective customers. Particular emphasis is
placed on strategic marketing to help identify the product/market fit, as well as marketing,
finance, technology and the management team involved in the new venture.
Dublin BIC has developed a business planning guide which provides a business plan model along
with explanations, advice and tips for writing the best plan for entrepreneurs at an early stage
of development.
Between 1988 and 2012, close to 4,000 entrepreneurs/business propositions were given such
business planning assistance, leading to 772 completed business plans. Often entrepreneurs
who have started up businesses previously come back to Dublin BIC with new business ideas,
typically these would be serial entrepreneurs who may have successfully exited a previous start-
up company and come back to Dublin BIC with another new venture idea.
Table 2.2: BUSINESS PLANNING 1988-2012
Total
Annual
Average
Business Planning Assistance 3,929 157
Business Plans Completed 772 31
Source: Dublin BIC
Enterprisestart2 (ES2)
Dublin BIC in partnership with Enterprise Ireland also delivers the ES2 programme targeted at
very early stage potential start-ups. Participants
15
at this six week programme are at
idea/concept stage and seek to establish if their idea is commercially viable, scalable and has
export potential. Via a combination of consultant led and peer feedback the participants self-
select how to proceed, leading to a number of outcomes:
? The entrepreneur may decide not to pursue entrepreneurship as a viable option for
them at this time.
15
Over 30 participants per year.
4,000 business propositions
were given business Planning
Assistance
800 business plans were
completed
11
Economic Impact of Dublin BIC Activities
632 start-ups and
expansions created
over 25 years, which
employed close to
2,500 at the start-up
stage
? Participants may be a referred to other supports from either the County Enterprise
Board or to the relevant Enterprise Ireland support.
? A small subset will progress to detailed engagement with Dublin BIC when they get to
the stage of requiring Investor Ready preparation support usually and have secured
Enterprise Ireland High Potential Start-up status.
2.3.3 Start-ups
As outlined previously, under Dublin BIC’s definition of a start-up, a company needs to be
trading regularly and in Dublin BIC’s opinion have a sustainable business model that means it
has a good chance of surviving and prospering.
The employment count of 2,500 new jobs created as shown in the Table below relates to the
year the companies were reported as a Dublin BIC start-up or business expansion and in most
cases, the cumulative employment total would be a multiple of the start-up staff size after years
of trading. We will return to this point in Section 3.
Table 2.3: START-UPS AND EXPANSIONS CREATED 1988-2012
Source: Dublin BIC
14% of these jobs (337) were created between 2010 and 2012 alone.
It is important to note that employment numbers for companies at this early stage are typically
low until they begin to expand and develop. Some of these start-ups have been very successful
in scaling up their activities and are growing significant revenues and providing significant
employment.
Total Annual
Average
New Start-ups Created 497 20
Existing Start-ups/Expansions 135 5
Total Number of Companies 632 25
Employment in new Start-ups 1,318 53
Employment in Existing Start-ups/Expansions 1,167 47
Cumulative Employment at Start-up Stage 2,485 99
Over the past 25 years, Dublin BIC has assisted in creating close to 500 new
enterprises, having brought them from pre-start stage through to start-up and
beyond.
In addition, 135 existing start-ups received advice and funding to expand their
operations (business expansions).
12
Economic Impact of Dublin BIC Activities
Survival Rates of Dublin BIC Start-ups and Business Expansions
Survival rates of Dublin BIC start-ups and business expansions have historically been high.
Independent surveys conducted in 2004 and 2009 showed that 80% of Dublin BIC assisted start-
ups survive their critical first five years.
A DKM analysis of Dublin BIC’s data over the last decade showed similar results. Out of a total of
189 Dublin BIC start-ups and business expansions over the ten year period, 34 companies were
recorded as having failed by the end of 2012, giving a total survival rate of 82%
16
.
Figure 2.3: DUBLIN BIC CLIENTS 2002-2012
Source: Dublin BIC
2.3.4 After Care
Dublin BIC continues to work with clients to help them accelerate past their formation stage and
provides a number of services which are described briefly below.
? Access to Second/Third Round Investment
? New Market Entry Strategy
? Strategic Business Development Advice
? Through Dublin BIC’s relationship with MBA Schools including UCD Smurfit School, TCD
and Thunderbird School of Management USA, start-up companies are linked with MBA
teams to carry out a specific project e.g. formulate a New Market Entry Strategy.
International Partnership & Technology Transfer Assistance
The International Technology and Transfer Programme provides access to the local, regional
and European network of BICs, which offers assistance to early-stage start-up companies in
accessing international markets and opens routes to trading overseas to them.
16
The CSO’s Business Demography gives a five year survival rate of 61% for companies “born” in 2006. This is not
strictly comparable with the Dublin BIC statistics, as the year of incorporation is not taken into account.
Survival
82%
Failures
18%
82% survival rate for
Dublin BIC companies
13
Economic Impact of Dublin BIC Activities
2.3.5 Access to Finance
Access to funding (risk capital) is one of the primary concerns of, and is of crucial importance to
early stage start-up companies. In Ireland there is an active risk capital market for start-ups
which comprises State (primarily through Enterprise Ireland) and seed and early stage venture
capital funding (though venture capital funds and private individuals/angel investors), and other
financial institutions (bank debt).
Dublin BIC has a successful track record of investing in start-up and early stage companies in
Ireland, having:
• Over 25 years of investment and fund management experience in Dublin;
• Specialist knowledge in deal structure and finance strategies for leveraging funding
sources;
• Access to funding from multiple sources including public and private sectors;
• A deep first hand understanding of funding issues facing early stage start-ups /
entrepreneurs;
• Aftercare service for business development and investment strategies for future
fundraising.
Dublin BIC utilises this extensive knowledge, hands-on experience and expertise with companies
to ensure that their approach to all sources of finance / funding is targeted, appropriate and
addresses key information needs. The investor ready preparation process challenges the
company through the development of an investor business plan. The different layers of support
include the underlying core competence in Investor Ready preparation for hi-tech
internationally trade start-ups which clearly positions Dublin BIC in the marketplace.
In addition to this advisory and support role, Dublin BIC also has a role in the provision of seed
capital to investor ready enterprises. Dublin BIC is a full member of the Irish and European
Venture Capital Associations (IVCA and EVCA) and is regulated by the Central Bank of Ireland.
Dublin BIC, as part of the Irish Business Innovation Centres, was a pioneer in the Seed Capital
arena in Ireland, in the provision of seed and early stage venture capital to start-up companies,
through three venture capital funds:
• £1m punt Irish BICs Seed Capital Fund in 1991 (closed)
• £4m punt Dublin Seed Capital Fund (1998-2006) (closed)
• €53m AIB Seed Capital Fund 2007 (open)
Dublin Seed Capital Fund (DSCF)
This fund was operational between 1998 and 2006. It was established by Dublin BIC with
support from private sector companies and Enterprise Ireland through the EU Seed Capital
Measure of the Operational Programme for Industrial Development 1994-1999. It is briefly
described below
17
:
Fund Amount €4.6m
? Term of Fund: 8 years (from 1998 to 2006)
? Number of Investments: 36
? Average Investment Amount: €125,000
17
Source: Dublin BIC
Dublin BIC is a full
member of the IVCA
and EVCA
DSCF invested €4.6m
between 1998 and 2006
14
Economic Impact of Dublin BIC Activities
HBAP invested €11m in 53
projects in Dublin/Leinster
area, leveraging €17m
Dublin Investor Register Service (DIRS)
The Dublin Investor Register Service was formed by the Dublin BIC in the late 1990s to
stimulate increased direct investment in local industry by providing a channel and contact point
for both potential investors and businesses seeking equity funds.
Halo Business Angel Partnership (HBAP)
Initiated in 2005, the Halo Business Angel Partnership is a joint initiative between Enterprise
Ireland, InterTradeIreland and the Irish Business and Innovation Centres. It has offices in Dublin,
Waterford, Cork and Galway and is managed by Dublin BIC.
HBAP matches private investors with pre-screened investment opportunities in start-up, early
stage and developing businesses. The investors bring business experience as well as financial
resources. Dublin BIC facilitates by arranging initial meetings between the parties and providing
support throughout the fund raising process.
Table 2.4: HBAP DEALS
18
COMPLETED TO YEAR END 2012
€'000
HBAP Deals 10,659
Other funds leveraged 17,448
Number of deals 53
Source: Dublin BIC
? 53 projects have been invested to date in Dublin/Leinster area.
? The €10.7 million in Angel Funding leveraged additional funds to the value of over €17.5
million, bringing the total investment to €28.2million, an overall leverage of 2.6.
? The average Business Angel investment in Dublin/Leinster to date has been €201,000.
AIB Seed Capital Fund
The AIB Seed Capital Fund was established in 2007 under the Seed and Venture Capital
Programme 2007-2012 as a joint venture between Enterprise Ireland and AIB Bank who
between them committed €53 million to the Fund. The Fund’s investments are jointly managed
by Dublin BIC and Enterprise Equity Venture Capital (EEVC)
19
. The Fund invests in Irish start-up
and early stage enterprises with high growth potential across a range of sectors including
information technology/web/mobile, telecommunications, renewable energy, medical devices,
industrial technology and consumer products.
Dublin BIC evaluates and manages all investments within the city and county of Dublin when the
initial investment amount required from the Fund does not exceed €250,000, while Enterprise
Equity concentrates on investments in the rest of Ireland and on investments in excess of
€250,000. The Fund has the ability to invest up to a total of €1.5 million in companies through
multiple investment rounds.
18
Definition of "Deal": Investors have invested money into company, legal documents complete and money in the
bank.
19
http://www.aibseedcapitalfund.ie/
15
Economic Impact of Dublin BIC Activities
The following table summarises Dublin BIC’s activity in relation to the Fund. Between 2008 and
2012
20
, 39 investments totalling €7.4 million were made. When leveraged funding from other
sources is included, a total investment round of €28 million was achieved, which represents an
overall leverage of 3.8 times. The average investment size was just under €190,000.
Table 2.5: AIB SEED CAPITAL FUND – DUBLIN BIC MANAGED INVESTMENTS
Year No of
Investments
Investment
Amount €000
Investment
Round €000
21
2008 8 1,592 5,420
2009 6 1,175 5,352
2010 3 650 1,850
2011 8 1,400 4,835
2012 14 2,577 10,430
Total 2008-2012
22
39 7,394 27,887
Source: Dublin BIC
The following table summarises the financing of early stage companies and start- ups facilitated
by Dublin BIC.
Table 2.6: DUBLIN BIC TOTAL INVESTMENT TO YEAR END 2012
Fund
€million
Additional Leveraged Funds
€million
Total Number of
Investments
Business Angels 10.7 17.5 53
AIB Seed Capital Fund 7.4 27.9 39
Source: Dublin BIC
When combined with the €4.6 million in 36 investments that the Dublin Seed Capital Fund
contributed between 1998 and 2006, it emerges that since its foundation:
2.3.6 Access to Space
The Guinness Enterprise Centre (GEC) was an initiative of Dublin BIC established in partnership
with Diageo, Dublin City Council, Dublin City Enterprise Board, Enterprise Ireland and the
Guinness Workers’ Employment Fund
23
. Its mission is to provide incubation space ranging from
10m² to 160m² to new and established small businesses, primarily in software services oriented
businesses, international/technological traded services, Ecommerce, multi-media, internet and
20
In the year to 31
st
August 2013, 7 investments totalling €1.1 million were made, resulting in total funding of €5.2
million.
21
Including leveraged funds
22
39 investments including 2
nd
round investments in 29 companies.
23
Dublin BIC, manager of GEC and the founding stakeholders were supported by Allied Irish Bank, FAS, Eircom, Smart
and Cable and Wireless.
Dublin BIC has been responsible for €22.7m of funds being directly
invested into over 100 projects up to the end of 2012.
AIBSCF invested
€7.4m
in 39 projects,
leveraging to total
investments of
€28m
16
Economic Impact of Dublin BIC Activities
mobile software development. It was opened in 2000 and, in line with international experience,
aims to accelerate the growth and success of start-up companies through an array of business
support resources and services, including:
? 6,000m
2
of flexible space
? Access to finance
? Business Advisory Support
? Common services and Clusters
? Networking connections.
The GEC is managed by Dublin BIC and is a fundamental part of the operational infrastructure of
both the Dublin BIC and the Dublin City Enterprise Board/Dublin City Council Local Enterprise
Office).
? In 2012 there were 79 enterprises located in the GEC, providing 300 jobs.
? This is an occupation rate of 90%.
? Since the opening of the incubation space, 340 companies have been accommodated
there, providing over 1,000 jobs directly and an estimated additional 1,000 support
jobs
24
.
? The AIB Seed Capital Fund and the Halo Business Angels Partnership (described above)
are both also located in the GEC. This co-location with major funders of start-up
companies, together with Dublin BIC management provides the tenants with access to
potential funding and business development advice for selected projects.
Table 2.7: KEY GEC STATISTICS
2012
Average incubation time (years) 4
Current occupancy rate % 90
Number of enterprises in GEC 79
Employment accommodated in GEC 302
Total number of occupant companies since opening of GEC 340
Total number of jobs 1,010
Source: Dublin BIC
The GEC is one of the leading enterprise centres in Europe with continued growth in the number
and quality of clients and their employees. This is against the turbulent economic backdrop and
existing competiton and significant new competition in the SME facility space.
2.4 CONCLUSIONS
Dublin BIC offers a one-stop service to advance potential business ideas to a stage where they
can be considered as High Potential Start-Ups (HPSU). Its integrated services bundle comprises
business consultancy, access to finance, workshops and seminars as well as enterprise space.
24
Source: Dublin BIC
Since 2000, 340
companies have
provided 1,000
jobs in the GEC
17
Economic Impact of Dublin BIC Activities
Dublin BIC’s key competency lies in getting potential start-ups to a stage where they are
“investor ready”. Entrepreneurs are prepared in depth before embarking on seed funding
rounds.
Dublin BIC has pioneered the Seed Capital Initiative in Ireland. It currently manages the Halo
Business Angel Partnership and co-manages the AIB Seed Capital Fund.
Dublin BIC has been responsible for over €22 million of funds being directly invested into over
100 start-up companies up to the end of 2012.
The Guinness Enterprise Centre is an initiative of Dublin BIC and has provided flexible office
space, shared services and networking opportunities to 340 enterprises since it opened its doors
in 2000. It has accommodated over 1,000 workers since then. The co-location with the AIB seed
Capital Fund and the Halo Angels Partnership provides entrepreneurs with access to potential
funding and business development advice.
The following chart summarises Dublin BIC’s activities over the past 25 years:
Figure 2.4: DUBLIN BIC ACTIVITY FLOW 1988-2012
Source: Dublin BIC
The economic impact of the full range of Dublin BIC activities is the focus of this report and will
be covered in the next Section.
18
Economic Impact of Dublin BIC Activities
19
Economic Impact of Dublin BIC Activities
3. ECONOMIC CONTRIBUTION OF DUBLIN BIC
As shown above, over the 25 years of its existence, Dublin BIC has been involved in the
formation and/or expansion of 632 enterprises, referred to as start-ups in the remainder of this
report.
25
. Some of these enterprises have grown into significant players in their respective fields
and employ over 200 people, while others are micro companies employing less than 10
workers.
This Section sets out to estimate the economic contribution of
Dublin BIC and the companies it assisted. The analysis is based
largely on the results of a DKM Survey
26
of start-ups and
expansions which have received assistance from Dublin BIC over
the years, focussing in particular on the last decade. Moreover,
the financial information collected from survey participants
relates to the latest current year, which in all but one case was
2012. Therefore, the economic impact of the start-ups assisted
by Dublin BIC over the past decade can only be estimated with
any degree of certainty for 2012. Clearly, the accumulated
impact of Dublin BIC start-ups would be a multiple of this, but
cannot be enumerated with the available information.
In addition, it is important to note that at any one time, Dublin BIC is assisting an average of 70
pre-start-up companies, many of which are already trading and contributing to the economy,
but have not yet met all the criteria to be regarded as a start-up by Dublin BIC. Thus, their
contributions are not included in this study.
3.1 A PROFILE OF DUBLIN BIC START-UPS
3.1.1 DKM Survey Respondents: Current Status
Of the 54 companies which completed the questionnaire, 98% were private limited companies
and 2% described themselves as “dissolved”. The next Table gives the survey respondents’
current status.
Table 3.1: RESPONDENT STATUS
Status (%)
SME - growth stage 47.1
Early Stage Company 39.2
Start-up Company 7.8
Working elsewhere 3.9
Entrepreneur seeking seed investment 2.0
Entrepreneur seeking advice and training to get investor ready 0.0
Total 100.0
Source: DKM Survey (n=51)
All respondents’ companies were incorporated between 1999 and 2010, with the largest
proportion in the more recent years (2008 - 13% and 2010 - 15%).
25
497 start-ups and 135 expansions of existing enterprises.
26
For description of survey, please see Section 1.
Economic impact
focussing on companies
assisted by Dublin BIC in
the last decade
Results in this section are
for 2012
20
Economic Impact of Dublin BIC Activities
3.1.2 Industrial Sectors
The change in the economic landscape over the 25 years of Dublin BIC’s operation can be
illustrated by the changes in the industrial sectors
27
into which Dublin BIC start-ups can be
categorised.
? In 2003, Professional, Scientific and Technical Activities (PSTA) made up 75% of start-
ups.
? However, by 2012 Information and Communication Technology (ICT) had grown to be
the most important sector, accounting for 61%.
? Online Retailing and PSTA both accounted for 17% of companies in 2012.
Figure 3.1: DUBLIN BIC START-UPS: KEY SECTORS 2003 AND 2012
Source: Dublin BIC
This is in line with the changes in the wider economy, where the number of ICT companies with
less than 10 employees has increased by 14% over the last six years to 2011.
28
3.2 FUNDING OF DUBLIN BIC START-UPS: SOURCES AND USES
The average amount in funds raised as disclosed by recipients was close to €470,000. As would
be expected, there was a wide variation around this average.
The following funding sources were identified and are listed below in order of frequency:
? Enterprise Ireland
? Private external investors
? Private internal investors
? AIB Seed Capital Fund
? Bank debt e.g. term loans
27
As defined by NACE codes.
28
CSO (2013), Business Demography 2011, latest figures available.
8%
0% 0%
75%
17%
5%
17%
61%
17%
0%
Manufacture
Online Retail
ICT
Professional,
Scientific, Technical
Activities
Admin & Support
Activities
2012
2003
61% of start-ups in
ICT sector
21
Economic Impact of Dublin BIC Activities
Export market expansion
(64%),
product development (62%),
and
additional employment
(56%)
were most important uses
for capital raised
? Other venture capital funds
? Halo Business Angel Partnership
? Dublin Seed Capital Fund
The funding that Dublin BIC assisted start-ups are able to attract is in turn used to leverage a
multiple of additional funds, which often only become accessible due to the success in the
original Dublin BIC induced round, as has been shown in Section 2.
Use of Funding
The funding secured was primarily used to fund export expansion, product development and
employment growth as the following table illustrates.
Table 3.2: CAPITAL/FUNDING USED FOR
%
Export market entry development/expansion 64.4
Product development (and Research & Development) 62.2
Additional employment 55.6
Development of business idea / Proof of concept 42.2
Capital expenditure 17.8
Other 11.1
New premises 4.4
Source: DKM Survey (n=45), more than one use of funding could be identified.
? There was a strong export emphasis to the use of funds with 64% stating that they used
funding to develop or expand exports.
? 62% used it for product development and 56% used the funding to create further
employment in their firms.
? 42% of respondents used the funding to develop a business idea.
? 18% put it towards capital expenditure.
? 4% purchased new premises.
? A further 11% of respondents identified ‘other’ uses for the funding they received.
Among these uses were sales pipeline development, marketing activities and funding of
cash flow.
Export Markets Identified by Dublin BIC Start-ups
29
Respondents who identified ‘Export market entry development/expansion’ as a reason for
obtaining funding were asked to identify these. The majority of respondents received funding in
order to develop or expand their export operations in the UK or the US.
? 64% of respondents identified the UK market.
? 39% identified the US market.
? The rest of Europe was the third most popular response with
32% of respondents identifying it as an export market
earmarked for entry development or expansion.
29
More than one export market could be identified.
64% of Dublin BIC
start-ups targeting
UK export market
22
Economic Impact of Dublin BIC Activities
3.3 ECONOMIC CONTRIBUTION OF DUBLIN BIC START-UPS
3.3.1 Turnover of Dublin BIC Start-ups
In regard to turnover in 2012
30
,
? 30% of respondents to the DKM Survey had an annual turnover range of between
€250,000 and €500,000.
? 28% had turnover that was lower than that
? 30% fell into the range between €500,000 and €2 million.
? The remaining 12% had incomes over €2 million.
Figure 3.2: TURNOVER DISTRIBUTION OF DKM SURVEY RESPONDENTS 2012, €
Source: DKM Survey (n=50)
Based on the reported turnover categories, the estimated turnover of the survey respondents
was €61.3 million in 2012, giving an average turnover of €1.23 million.
This is significantly higher than the average turnover of €336,000 reported for micro enterprises
in the ICT sector in Ireland in 2011.
31
Expectations for Future Turnover
Survey respondents were very optimistic about their future turnover:
? 91% of respondents expected their turnover to increase over the next 12 months;
? Only 2% expected a fall; and
? 7% anticipated no change.
30
Or the latest year available.
31
CSO (2013) Annual Services Inquiry 2011http://www.cso.ie/en/releasesandpublications/er/asi/annualservicesinquiry2011/#.Ukv434brwRs
Grossing up to the total survey population gives a total estimated turnover
of €172 million in 2012 for the start-ups and expansions that Dublin BIC
helped create in the past decade.
Average turnover of
€1.23 m in 2012
Total turnover of
€172 m in 2012
23
Economic Impact of Dublin BIC Activities
3.3.2 Expenditure by Dublin BIC Start-ups
When asked to provide a breakdown of their expenditure
32
, survey respondents disclosed that
in 2012, 50% of their turnover went on total payroll (including PAYE, PRSI, USI etc.), while 15%
was spent on funding research and development (R&D).
Table 3.3: BREAKDOWN OF TURNOVER, RANKED, 2012
Spending on:
Total Payroll 50.4%
R&D Expenditure 14.5%
Inputs Purchased (Materials) 10.8%
Sales/Marketing Costs 6.6%
Other Taxation (VAT) 4.7%
General Office Costs (Rent/Rates/Utilities) 3.7%
Capital Spending (IT Equipment, Machines,
Buildings, Vehicles etc.)
3.6%
Contracted Professional Services (auditors, legal) 1.6%
Other 4.1%
Total 100.0%
Source: DKM Survey (n=37)
This is a very high R&D intensity. By comparison, the proportion of turnover spent on R&D by
small sized companies in Ireland (