Four Cs To Get Ireland Moving
Politicians and business leaders in Ireland talk a lot about supporting job creation, and economic growth. We know we cannot accept the status quo. The economy, though perhaps improving, is just not recovering fast enough. An unacceptable 13 per cent of our brothers and sisters are sitting at home, on the Live Register. It’s an extraordinary waste of human talent and capability. The good news is the government is all too aware of this as well, and motivated and able to act.
Last Thursday, after seven months of consultation and revision, the government released the report of the Entrepreneurship Forum. The forum shares the voices, opinions and everyday challenges of thousands of Irish entrepreneurs who are trying to build businesses for themselves, for their employees, and for Ireland.
What we heard is included in the report’s 69 recommendations. These recommendations are concrete, grounded in real experience, and address issues that keep entrepreneurs awake at night. These recommendations occur across four dimensions: culture, community, competency and capacity. These are the four Cs of a strong start-up ecosystem we hope to develop for Ireland.
This report is a call for citizenship and to take individual responsibility for rebuilding the country. Start-ups require individual initiative, will and determination. We should not look to government to provide supports and handouts. As business people, we must first look to ourselves and to our customers.
Individual responsibility doesn’t mean being a lone wolf. The entrepreneurial community depends on sharing of learnings and experience, and a culture of give before you get’: embracing volunteerism, helping other entrepreneurs find their feet, being an advocate for promising start-ups and great ideas.
Ireland respects its entrepreneurial heroes, but not enough Irish people are taking the step to become those heroes themselves and start businesses. There is a higher-than-average fear of risk in Ireland: Global Entrepreneurship Monitor figures for 2013 out this week saw four in 10 Irish adults report that ”fear of failure” would prevent them from starting a business.
Where our culture sometimes falters is in those who seek to shame or assault through begrudgery. It’s somewhat harder to be leading a charge when arrows are aimed at your back. Sure, we need a culture which celebrates entrepreneur heroes, but more importantly, we need a culture that celebrates individuals who continue to try, even if they fail.
A key recommendation of this report is to work with the Department of Education to embed teaching of entrepreneurship into primary, secondary, and third-level schools and colleges. We also need more initiatives such as CoderDojo – the global movement of computer coding clubs for young people which started in Ireland. CoderDojo fosters innovation, creativity and leadership in our young people – all qualities that form the base of an entrepreneurial culture.
Our people are this country’s greatest asset, and change will start with us. We need to leverage our talent base to build stronger and more vibrant hotspots of entrepreneurial activity.
Accelerator programmes such as Launchpad and Wayra help new businesses grow and develop networks, and initiatives by EO Ireland and the Startup Ireland linked-in group build new relationships and trusted mentor networks every day. Peer mentoring networks are fundamental to personal and professional growth.
We call on Nama to provide 50,000 square feet of infrastructure for co-working spaces in five city centers across Ireland, co-working centres such as Dogpatch Labs of Dublin – physical spaces where ideas are sparked, incubated, and cross-fertilised.
We also call upon every entrepreneur in Ireland to participate in the peer mentoring initiative OfficeHours.ie, a voluntary initiative where experienced entrepreneurs and experts freely give their time to provide advice and mentorship to other start-ups. Volunteerism and community building is critical for every start-up ecosystem. We hope to have hundreds of people on the OfficeHours.ie network this year.
The semester before I graduated from college in the US, I took a course called ‘Principles of Entrepreneurship’, where the class broke up into groups of students who developed business plans for technology ideas. My group developed a business plan for what became MapInfo. Three of us quit school, formed the company, and after a seven-year journey, the company became a public company that made us multimillionaires . . . while also providing the economy with a company that has since employed more than 1,000 people and generated billions in turnover (and taxes).
We also must develop industry partnerships and encourage commercialisation in our third-level institutions. Universities and Higher Education institutes graduated nearly 8,000 students in science, mathematics, computing, and engineering last year. The government has poured billions of euro into research centres in the last ten years, but there is a shockingly low return for those investments in terms of commercialisation.
The forum recommends that every undergraduate and postgraduate Irish science or tech student be required to take a course in entrepreneurship. This will inspire 8,000 of Ireland’s brightest minds to help develop the country’s economy, and bring a better balance to why we are investing in research in the first place: not to end up with white papers or technical journals, but to drive change in society and improve lives of the population through commercialisation.
Capacity is about access to finance and talent. Our number one recommendation around finance is simple: reform our capital gains so it becomes attractive to invest in business. When you have high capital gains tax (at 33 per cent, Ireland has one of the highest), there is no incentive to take risk on your capital. A reasonable rule of thumb is that capital gains tax should be no more than half of the regular tax rate. At that rate, the max capital gains tax in Ireland would be 26 per cent, which would still be higher than most countries. However, were we serious about trying to create employment, we’d be more aggressive, and go for a 20 per cent capital gains tax (which would still be double the 10 per cent CGT our neighbours in Britain are charged, and above the OECD average of about 15 per cent).
Secondly, we encourage peer-to-peer lending. Billions of euro in capital sits in Irish banks. We recommend incentivising the private lending of private capital through a tax break for the first €10,000 in interest income from start-ups.
Thirdly, we recommend enabling simplifications in the structure of employee share option schemes, so companies can reward staff by participation in long-term stock holdings that don’t result in unfavorable short-term taxes to staff while costing of thousands of euro annually in accounting expenses to the companies.
Entrepreneurs know they are only as good as their team, and Irish start-ups need to build the best teams possible. Forfas estimates Irish companies will collectively have 44,500 job vacancies for people with high-level information and communications technology skills over the next six years.
To meet this demand, we need to expand JobBridge and youth training schemes. We also need to make Ireland a key destination for foreign high-tech workers. Open Ireland has been leading an initiative to streamline the visa process for foreign high-tech workers who want to come to Ireland. I am greatly encouraged by how able the Department of Jobs has been in taking concrete steps to simplify and streamline what was previously an onerous process for companies and workers.
Culture, competency, capacity, and community. Taking action on these four Cs will put Ireland on the path to becoming an entrepreneurial hub, generating stability and growth and prosperity for our economy and our people.