Monday 24 June 2019

Startups losing out to 'big tech', warn investors

Claims that government policy designed to target giants hinders Irish firms, writes Fearghal O'Connor

A report has found that 65pc of investors in Ireland are concerned that government policy can inadvertently hinder startups.
A report has found that 65pc of investors in Ireland are concerned that government policy can inadvertently hinder startups.

Tech investors in Ireland are concerned that government targeting of big tech companies is hindering the growth of startups here, according to an international survey of the sector.

The report found that 65pc of investors in Ireland are concerned that policy is often designed to focus on big tech companies and can inadvertently hinder startups.

Report author Lenard Koschwitz of Brussels-based consultancy Allied for Startups, which carried out the survey, said the results showed that "it is important that the Irish Government demonstrates more innovative thinking to ensure Ireland does not fall behind other tech centres".

The report - entitled 'The Impact of Regulation on the Tech Sector' - sought the views of technology investors across Europe, including Ireland, with regard to regulation and policy decisions that impact development of the sector.

It found, in particular, that tech investors in Ireland are highly conscious and aware of the regulatory environment and that this can have a huge impact on their decision to invest or not.

"Ireland is a good place to do business and the state agencies do excellent work to support startups," said Koschwitz. "However, an increasing list of regulation coming from the EU and issues like housing and living costs are a major concern and have the potential to prevent investment in Irish startups."

It also found that 88pc of tech investors in Ireland believed that more could be done by Government to create an environment where tech startups could thrive, while 76pc of Irish-based investors agreed that more stability in policy and regulation would lead to a better environment for investing.

"As the report has shown, there is a big concern amongst Irish and European investors that policy and regulation designed for specific companies could inadvertently hurt startups," said Koschwitz.

"This is a trend that is not restricted to Ireland but one which all governments need to step back and consider the impact regulation will have on the whole tech sector," he said.

Koschwitz said that 65pc of those surveyed had said that making tech companies liable for specific online activity could be damaging for tech businesses of all sizes, but particularly so for startups and smaller companies.

"The proposed digital tax is also seen as likely to be a significant burden on small businesses, and would be harmful for the long-term prospects of the local market - 88pc believe a digital tax on turnover could negatively impact investment in tech businesses and startups in Ireland and 71pc think a digital tax could make it harder for startups and scaleups to succeed," he said.

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