2025-11-13

7. Deputy Colm Burke asked the Minister for Enterprise, Tourism and Employment if his Department and Enterprise Ireland plan to introduce a growth equity fund to help scale and co-invest in large privately owned Irish companies with a view to expansion in other jurisdictions; if his Department has researched similar programmes which are operational in other European countries, such as Denmark, Finland and Germany; and if he will make a statement on the matter. [62264/25]

Do the Department and Enterprise Ireland plan to introduce a growth equity fund to help scale and co-invest in large privately owned companies with a view to expansion in other jurisdictions? Has the Department researched similar programmes which are operational in other European countries, such as Denmark, Finland and Germany?

Ireland has a strong start-up ecosystem, but scaling remains a challenge due to limited access to long-term patent capital and finance. My Department is finalising a finance for scaling implementation strategy. This strategy will align with the commitments outlined in the programme for Government and supports the specific actions set out in the action plan on competitiveness and productivity. The purpose of the strategy is to move towards an ecosystem in which firms will have a reliable range of funding options to scale and expand. The strategy will include an SME scaling fund administered by Enterprise Ireland. The exact design features of the fund are being developed, but my Department, together with Enterprise Ireland, intends to have the fund in place as soon as possible. The work to have a fund in place in 2026 will be progressed over the coming months. It is important to note that the SME scaling fund is only part of a suite of instruments to be delivered across two phases that will work to enhance the ecosystem and, consequently, reduce the gap in the market. For example, policy actions to further incentivise private capital to invest more at the scaling stage will be developed in the second phase of the work which is already under way. All of this work follows on from the report of the finance for scale-ups working group entitled the Use of Finance as a Catalyst to Develop a Scaling Ecosystem, which was published by the Department in July 2024 and which is available online. The finance for scale-ups working group examined good practices in other countries and established an international subgroup specifically to examine policy interventions in other EU member states, including Denmark, Finland, France, Spain and Sweden. It also looked at the UK and Singapore. The recommendations in the report were informed by the research of the international subgroup and included the introduction of a State-backed scaling fund.

Ireland has a significant number of indigenous companies that have successfully scaled €100 million in revenue and turnover and 250 employees, creating essential local employment and economic prosperity across the country, especially in rural areas. Despite the efforts of many, the majority of the current State supports treats such companies as too large to be SMEs and too small to be public limited companies, PLCs. While Revenue currently provides direct equity to start-ups and high-potential start-ups, HPSUs, larger Irish companies lack the opportunity for direct equity investment to support international expansion, especially through mergers and acquisitions. I have already outlined that Denmark and Germany are providing support to companies to expand outside their jurisdictions. The gap slows down the scaling growth of Irish companies outside Ireland despite the success of some notable exceptions. The lack of direct State equity backing invariably means most end up using private equity. The opportunity for Ireland to cover it is lost and foreign ownership is the ultimate outcome. That is basically where I am coming from on this. These companies want to expand. There is an opportunity for them to expand but they cannot do so. If they get the equity, it is extremely expensive. In order to expand, they end up getting into ownership from abroad.

I thank the Deputy for the points he has raised. I assure him that the fund is being designed in conjunction with Enterprise Ireland. We hope it will be operational in 2026. We expect that there will be direct investment in start-ups first. To the Deputy's point, we need to support indigenous Irish SMEs. That will enable Enterprise Ireland, which does tremendous work in the context of co-investing alongside private leads. Enterprise Ireland has a great reputation as being the honest broker in regard to seed and venture capital schemes. We want to sequence this to ensure that SMEs have early deployment and long-term leverage, and that we can give them investment when it is required. On the size of the equity gap, we estimate that to be in the region of €860 million to €1.3 billion. The State's role is to act as a catalyst as opposed to replacing private markets. We need to support that. The fund will be right-sized within the capital plan.

This is an important matter, because these companies create a huge amount of employment locally, especially in rural areas. It is important that we help them to expand further, particularly where they already have access to markets but are restricted because they need access to finance in order to expand. One of the companies I know has more than 800 employees, is operating outside Ireland and is bringing finance back into the country in the context of what it is doing. It is also giving employment to people who are working here but who also work abroad for certain periods. There is a huge opportunity here. Many of these companies are not based in the major population centres like Cork city or Dublin city; they are based in rural areas. They have grown gradually over the years and have made a contribution to local economies and to the national economy. They want to continue to do that. Japan has one person employed for every person who is retired. As a result of its work abroad, Japan is able to get money in to support that system.

I agree with the Deputy. Our Department is very much about keeping Irish companies scaling and ensuring that they continue to realise their export potential and create anchor jobs within the regions and right across the country. The purpose in this regard is to protect vital jobs that are the backbone of our economy. That is why we want the strategy to operate on the basis of their needs. Enterprise Ireland already does tremendous work in this space. There is an expert advisory panel comprising industrial leaders, venture capitalists, Scale Ireland and tax specialists. The panel has met on four occasions since December 2024. We want to ensure we are shaping this, that there is a governance standard in place and that, in the context of the Deputy's point, we can support many companies that need of capital at this time in their business journeys.