Saturday 18 August 2018

State agency now world's second-biggest fintech investor

SME advice

Over 10 years, Ireland's fintech return on investment is well above the industry average. . Photo: Stock Image
Over 10 years, Ireland's fintech return on investment is well above the industry average. . Photo: Stock Image

Eoin Fitzgerald

Some are surprised to learn that Enterprise Ireland is one of the largest and most successful fintech investors in the world.

The number one fintech investor is California's Y Combinator, described by The New York Times as a 'startup machine'. Last year it invested in 29 companies. The second most active in the world was Enterprise Ireland, with 23.

That puts it ahead of high-profile players, including Digital Currency Group and Accel Partners, which backed 19 companies each, and iconic Silicon Valley-based operators, such as 500 Startups (17), and venture capital titans like Sequoia (15).

Attendees at an event hosted by Enterprise Ireland in June heard about the advantages Irish fintechs enjoy over those in other countries.

More than 100 players from the venture capital and international financial services sectors in Asia Pacific, the Middle East, Africa, Europe, and the US joined the event.

In 2016, Enterprise Ireland's portfolio of more than 200 fintech firms generated more than €1bn in revenues. Ireland's reputation for fintech excellence is growing, with Enterprise Ireland playing a central role.

Nicola McClafferty, an investor with venture capital firm Draper Esprit, said at the event: "Enterprise Ireland is unique in a European context and that brings a significant advantage to Irish companies."

What makes a small country like Ireland such a fertile seedbed for fintech? Firstly, it benefits from an exceptionally collaborative culture.

Unusually for an entrepreneurial ecosystem, this collaborative approach includes government and state agency support, with fintech treated as a national priority through instruments such as IFS2020, Ireland's 'whole of Government' approach to driving growth in the financial services sector.

Ireland also has an exceptional selection of global players, and is home to operations of nine of the world's top 10 tech firms, including Facebook, Google and Amazon.

It is the fourth-largest exporter of financial services in the world, and home to some of the biggest names in global financial services, from Bank of America Merill Lynch, to Barclays, and Sumitomo Mitsui.

While Ireland hosts all of these companies, none compete for customers in Ireland, enabling extraordinary levels of collaboration. It also allows Irish fintechs an unrivalled ability to secure expertise. Many of Ireland's fintech founders know first-hand the pinch points of the sector, having held senior positions.

Pete Townsend of Norio Ventures credited: "A strong startup community and great government support programmes. As a small country of five milllion people, closeness is a key factor. People talk about six degrees of separation from Kevin Bacon, in Ireland it's two. If the person you are talking to doesn't know the person you need to talk to, they will know someone who does."

Irish companies take on markets worldwide from an early stage. Enterprise Ireland's #IrishAdvantage campaign supports that ambition, directly connecting companies with potential buyers and partners.

Our fintech team handles all companies in the sector, from two-person startups to 500 employee growth-stage enterprises, providing an unrivalled depth of knowledge. It's the same holistic approach taken to food, for which Ireland has a long-established global reputation.

A new regtech white paper Beyond Compliance launched at June's MoneyConf event. Highlighting the strength of Irish regtechs, such as Corlytics, Fenergo, Gecko Governance, Governor Software and Know Your Customer, it aims to generate global connections for Irish fintechs.

Investors worldwide recognise that an Enterprise Ireland-backed company has a significant seal of approval, evident in our strike-rate.

Over 10 years, our fintech return on investment is well above the industry average. We might not seek to sit on the board of investee companies and are not driven by the same return as other investors but, like them, we back successful, scalable, international businesses.

The strength of that approach is clear in the results.

  • Eoin Fitzgerald is a senior development adviser for fintech at Enterprise Ireland

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