€125m fund to bridge SME 'equity gap' is launched
A €125M fund has been launched in an attempt to fill what Jobs Minister Richard Bruton calls an "equity gap" for medium-sized businesses.
The fund will provide between €2m and €10m to medium-sized companies, which generally have between 50 and 100 employees.
Mr Bruton said these medium-sized companies were "the backbone of Ireland" but find it difficult to raise investment in amounts over €2m. He said the new fund would go some way to closing this gap and identified food, engineering, technology and manufacturing as sectors likely to benefit.
Investment decisions surrounding the fund will be made by international business investors MML. "It is unquestionably a statement of a restoration in confidence in Ireland," said MML founding partner Rory Brooks.
The Government has provided €25m of the financing while a number of private investors supplied the rest. These include AIB, the European Investment Fund, subsidiary of US insurance giant Cigna and US venture capital firm GoldPoint. They have each invested between €20 and €40m. In return they will receive equity stakes in the businesses selected for investment.
"GoldPoint and Signa, in particular, receive investments from around the world but have chosen to come here – they asked me to specifically make that known," said Mr Brooks.
The fund is the first of three being made available to medium-sized companies.
The Irish Software Association welcomed the news, but said the fund would "not solve the funding gap".
"Mid-stage technology companies, in particular, find it very difficult to access funding from traditional sources," said Edel Creely, chair of the association, which is a division of business group Ibec.
She added that research shows access to finance remains a problem for over one-third of Irish software and digital technology companies.
However, she recognised that the announcement "sends a strong signal to Ireland's SME community that the Government recognises the potential of the SME sector to deliver jobs and an innovation-intensive economy."