Financing New and Expanding Companies BES & Seed Capital Scheme and the Role of Enterprise Ireland 12th November 2007 Cork Gerard OBrien High Potential Start Up Division Enterprise Ireland

Enterprise Ireland Established in 1998 Responsible for supporting the establishment and growth of Irish owned and controlled enterprises Clients are manufacturing and internationally traded services sector companies employing 10 or more and City and County Enterprise Boards are responsible for companies employing less than 10 with the exception of High Potential Start Ups (HPSUs).

Types of new enterprises we support …. - HIGH POTENTIAL START UP BUSINESSES - What is a High potential start-up business? Company that manufactures or trades services internationally; Usually product / services based on technological innovation; Export oriented; Involving industry experienced team Potential for sales > 1m and 10 employees within 3/4 yrs Irish owned and located in Ireland.

Sources of Start Up Finance n Entrepreneurs, Relatives and Friends »3 Fs - Friends, Family and Fools often avail of »Seed Capital Scheme/BES n Debt »Bank loans, overdrafts, invoice discounting n Venture Capital n Private Investors »Wealthy individuals - BES »Cashed out entrepreneurs - BES »Business angels -BES »BES n Development Agencies »Feasibility Study grants »R&D grants »Employment grants »Preference shares BES has been and will continue to be an essential feature of Irelands start up financing system

Background to the New BES/SCS and Changes Sustained campaign by DETE, Enterprise Ireland and Forfas Government Commitment – Budget & Finance Bill but EU Commission Approval Required EU Commission Approval – 24th August 2007 Clarification – EU, DETE, Finance,Revenue, EI Commencement Order 6 th September 2007 Effective 1 st January 2007 to 31 st December 2013 However Terms & Conditions Apply

Main Changes Schemes extended 7 years Company limit from 1m to 2m Investor limit from 31,750 to 150,000 BES 100,000 SCS Approval Vs Payment of Employment grant qualifies ITS companies (previously needed payment) Recycling Companies must be in receipt of grant or financial assistance Includes a definition of recycling

Role of Enterprise Ireland - Procedures Specific, Limited & Clearly Defined Procedure differs for BES and SCS Procedure differs depending on Sector e.g Manufacturing, Internationally traded Services, R&D, Recycling

Industrial Development Act 1986 (No. 9 of 1986).SCHEDULE Software development; Data processing and electronic commerce; Technical and consulting services; Commercial laboratory services; Administrative/service centres, co-ordination and headquarters services Research and development services; Media, multimedia and recording services; Entertainment and leisure services; Training services; Publishing services; International Financial services; Healthcare services; Construction related services; Environmental services; Supply Chain Management and Logistics Management services; Commercial international standards bodies; Technology test centres; Prototype laboratory services; Intellectual property services; Group Procurement; Shipping services.

BES Qualifying Requirements and EI Role

SCS Qualifying Requirements and EI Role

Changes - Eligibility for BES Dublin and Mideast. Seed, start up stages for small and medium Expansion stage for small only Cork city and county Up to 31/12/08 Seed, start up and expansion stages for small and medium From 01/01/09 Seed, start up stages for small and medium Expansion stage for small only All other Counties Seed, start up and expansion stages for small and medium

Implication of BES/SCS if Companies Apply for Grants and other supports from Enterprise Ireland and other Development Agencies

Changes – Reduction of Grants & Payments EI must reduce the % level of some supports or maximum eligible amounts offered to companies By 50% in Dublin, Kildare,Wicklow & Meath (Cork from 2009) 20% in all other areas Total Reduction to equal total BES/SCS Investment received Reduced Grant and supports limits will apply for 3 year period starting with 1 st investment since 1 st Jan 07 Companies required to make declaration of BES/SCS received

When is the 3 year time period triggered? BES / SCS receipt date How will the process work within EI? EI monitors – date of receipt and how much, Reduction in subsequent approvals after the date of BES receipt,

What impact will the timing of the EI approval have on the reduction of grants and equity supports EI approval before BES is approved to the Company? None EI approval after BES is received by the Company? Reduction If Company has a risk capital investment since the 1 st of January 2007 that could convert to BES, Enterprise Ireland approval must also be reduced.

Grants/Supports Subject to Reduction Consultancy, Trade Fairs, Capital Grants/equity, Training grants/equity Employment Grants/equity (including key skills in BMW only).

Grants/Supports Not Subject to Reduction Research Technology and Innovation (RTI), R&D Grants/equity, Feasibility studies, Proposed new Innovation aid, (awaiting EU approval) Western Investment Fund, De minimis aid, e.g. Market Research, Mentor, Employment grant (Key skills) in non BMW, County/City Enterprise Boards, Bord Bia, FAS. EPA

Talk to Us…… If you or a clients are starting a business that has export potential If you are looking to Invest in new start ups If you have questions around EIs role in certifying you or a client for BES/SCS Gerard OBrien Tel: