Startups group says tax change could unlock €100m
The upcoming Budget should introduce a scheme to encourage more investors to back early stage firms with their savings, according to a paper prepared by a group of business leaders representing over 2,000 start-up companies in Dublin.
In its pre-budget submission, seen by the Irish Independent, the Dublin Startup Leaders Group calls on the Government to introduce an equivalent to the UK's Seed Enterprise Investment Scheme (SEIS).
The group, founded by the Dublin Commissioner for Startups Niamh Bushnell, is made up of representatives from more than 40 organisations including the Dublin Chamber of Commerce, the Irish Software Association and the Digital Hub.
In the UK the SEIS scheme encourages investors to finance startups by providing tax breaks for people prepared to back risky projects.
Investors gain income tax relief of 50pc on a maximum investment of £100,000 and also benefit from 50pc capital gains tax relief on any reinvestment of assets in an SEIS qualifying company.
The combined tax reliefs limit the exposure of higher rate taxpayers to 22.5pc of their investments.
Since its launch in April 2012, more than 2,700 British companies have received investment through the scheme, raising over £240m in capital, according to the UK Treasury.
The Startup Leaders Group here said it wants the Government to "unlock" funding for high growth companies in Ireland by introducing of a scheme like the UK's. "According to the Irish Central Bank, there is over €98bn sitting in household short term deposit accounts in Ireland.
"If a SEIS-type relief was introduced in Ireland, and encouraged investment of even 0.1pc of these funds, €98m of cash would be released for investment into between 600 and 700 startups and create multiple jobs directly and indirectly as a result," the pre-budget submission states.
"Currently the environment in Ireland doesn't encourage the average man or woman on the street to get involved in investing or startups," Niamh Bushnell said.
Speaking to the Irish Independent, Ms Bushnell said that the figure shows the potential cash that could be tapped for investment.
"Even if we use one of the smallest percentages that we can imagine it is still already €98m, it is a massive injection of cash. Even if it is only taken up by a minimal amount of people it is still a massive opportunity." She said an SEIS-equivalent scheme would help create more of an entrepreneur-friendly environment in Ireland.
"Currently the environment in Ireland doesn't encourage the average man or woman on the street to get involved in investing or startups," she said.
"The idea is not to transfer every single part of the UK scheme, the idea is to put something in place that has a similar spirit and philosophy."
Bringing in a scheme was of "critical importance", she said, adding: "We are starting to see companies move out of Ireland and to the UK earlier as it is easier for them to get early stage funding there. If we don't have an environment that prompts people to set up companies than we will fall behind."