While Irish founders are embracing the transition to artificial intelligence (AI) in their droves, the lack of funding and unattractive State supports are taking a toll.
It appears to be just as difficult for Irish start-ups to attract investment in 2024 as it was a year earlier, the latest Scale Ireland 2024 State of Start-ups Survey indicates.
There are currently more than 2,200 indigenous tech start-up and scale-up companies, employing more than 52,000 people, in Ireland. For each additional job created by a start-up, five additional jobs are created in the wider economy. There are 943 start-up and scaling companies based outside of Dublin.
“The survey demonstrates the challenging investment landscape facing start-up and scaling companies and the need to attract more private investment into the sector”
A record 340 tech start-up founders and CEOs contributed to the survey, which provides valuable insights on key issues including the potential of AI, the economy, employment, taxation, state supports and incentives, skills, diversity, and climate.
A supportive landscape for start-ups?
Nick Ashmore, Director, Ireland Strategic Investment Fund, Jenny Melia, Executive Director, Enterprise Ireland Martina Fitzgerald, CEO, Scale Ireland, Adaire Fox-Martin, Head, Google Ireland and President, Google Cloud and Brian Caulfield, Chair, Scale Ireland
This year’s findings highlight the high adoption of AI, funding challenges, optimism for new investment incentives, and mixed trends in recruitment and retention.
The survey’s findings coincide with Scale Ireland’s third annual Regional Start-up Summit in Limerick today (21 February) supported by Google, Ireland Strategic Investment Fund, Enterprise Ireland, Atlantic Bridge, University of Limerick and RDI Hub, Killorglin. Minister of State Dara Calleary, TD, addressing the Summit, which is taking place from 12pm to 3pm at the University of Limerick.
The survey shows that half of the CEOs and Founders surveyed (50.3%) consider funding to be their biggest challenge which is a similar level to last year (51.6%), reflecting the challenging funding landscape. The second-biggest challenge identified is the cost of doing business (16.2%) which has risen from 2023 (12%), while the recruitment and retention of staff was also identified as an issue (13.2% in 2024, compared to 16.9% in 2023). Other issues included lack of expert advice and support.
Almost 80% of respondents feel it is difficult or very difficult to attract capital, which remains unchanged from last year, reflecting the funding situation.
Did the Budget deliver?
Almost 80% believe that the 5% increase in the R&D tax credit will have a positive impact, while 58% believe the reduced CGT rate for angel investors will have a reasonably positive or big impact.
65% are unaware of new EU State Aid rules which reduce investor relief under the EIIS scheme (Employment investment incentive scheme).
The survey found that uptake of state supports remains unattractive with 89% of respondents not using the KEEP share options scheme to retain/recruit staff (up on 83% last year), while 64% are not availing of the R&D tax credit (66% in 2023), and 54% find it complicated (up on last year 49%).
“The survey demonstrates the challenging investment landscape facing start-up and scaling companies and the need to attract more private investment into the sector,” said Scale Ireland chair Brian Caulfield.
“It also highlights the complexity of many state supports so this year’s consultation by Revenue to simplify such schemes is very welcome.”
Despite the frictions and obstacles put their way, Irish tech start-ups are embracing AI in their droves with 82% deploying or preparing to deploy AI.
83% of Irish start-ups believe AI will have a positive impact on their business. Almost half (49%) think it will increase productivity and 17% believe it will increase market growth.
On the subject of sustainability, 66.5% of Irish founders/CEOs questioned did not have a sustainability plan, which remains virtually unchanged from last year (66.9%).
“Our findings are very clear on the potential of AI – the founders and CEOs of Irish tech start-up and scaling companies are embracing AI in a big way,” said Martina Fitzgerald, CEO of Scale Ireland.
“The vast majority of respondents are overwhelmingly positive about its potential and believe it will have a big impact on their businesses.”
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