State Investment in SMEs – the Irish experience Patrick Crowe Quidico Software patrick.crowe@quidico.com

1. State Investment in SMEs – the Irish experiencePatrick CroweQuidico Softwarepatrick.crowe@quidico.com Binary 2003

2. An Irish Government Agency dedicated to supporting Irish SME’s. Support is provided to enable companies to develop a sustainable competitive advantage leading to increased profitability, exports and employment Enterprise Ireland

3. Driving Company Investment in People and Technology • Development of Equity Availability • Internationalisation of Industry Enterprise Ireland Strategy

4. Tax Based • Bank Finance • Equity • Enterprise Ireland - Grants - Equity Typical Sources of Finance

5. Private • Individuals • BES • Business Angels Institutions • Corporate Finance Houses • Brokers Corporate Venturing/Joint Ventures Capital Markets Enterprise Ireland • Ordinary Shares • Preference Shares Venture Capital Funds • Seed Capital • Early Stage • Development • Specialist Funds • Regional Funds • Overseas Sources of Equity in Ireland

6. Two Approaches • Direct Investment • Indirect Investment managed by Enterprise Ireland with clients directly Venture Capital Fund Enterprise 2000 Fund Enterprise Ireland as an Investor in Irish Industry

7. 600 Investee Companies i.e. Ordinary Shares + Preference Shares • Ordinary Shares • Convertible Prefs. Shares • 10 Public Companies • Valuation at Cost - EUR 150m • Sectors • 45% Computer Software • 10% Electronics • 10% Food • 5% Engineering • 5% Healthcare • 25% Miscellaneous Enterprise Ireland’s Direct Equity Portfolio

8. Investment into Venture Capital Funds by the Irish Government • Funds and programmes managed by the private sector • The only programme of its type in Europe • It is not considered as state aid • Main objectives are :- to stimulate the investment by the private sector of funds through matching EU (public) and private finance.- to specifically assist start-up operations and early stage developmentcompanies. Enterprise Ireland’s Indirect Equity Portfolio – Venture Capital

9. 15 funds totalling EUR90m from Enterprise Ireland at end-2001; end-2002, 33 funds with EUR145m invested • ACT Enterprise Fund - EUR 14m • Alliance Investment Capital Ltd. - EUR 9.5m • AWG - EUR 6m • Bank of Ireland Entrepreneurs Fund - EUR 13m • Campus Companies Venture Capital Fund - EUR 7.5m • Dublin Seed Capital Fund - EUR 2.5m • First Step - EUR 4m • ICC Software Fund - EUR 19m • Irish BICs Seed Capital Fund Ltd. - EUR 2m • Guinness Ulster Bank Equity Fund - EUR 7.5m • Millennium Entrepreneur fund Ltd. - EUR 1.5m • Smurfit Venture Fund - EUR 4m • Shannon Ventures Ltd. - EUR 250k • Trinity Venture Fund - EUR 20m • eircom enterprise fund ltd. - EUR 2.5m Funds established with Enterprise Ireland investment

10. 33 funds fully operational • More than 350 investments made. • Areas of investment include Software, Manufacturing, Communications, Multimedia, Biotechnology, Services and Food Processing. • 80% of the investments are in Start-up and Early Stage companies. • 60% of invested funds are in software projects. Venture Capital FundsPerformance

11. Targeting early stage young entrepreneurs. • EUR10m available. • Funded by Enterprise Ireland & Bank of Ireland (No E.U. dimension). • Typical investment EUR32k to EUR127k • Combined equity and loan package. • 5-7 Year time horizon. Failed – too difficult and inefficient to manage for such small investments Enterprise 2000 Fund

12. Government Leadership • Private Sector Cooperation • Step by Step Approach • ASSISTANCE rather than AID • Worldclass professionalism of processes • Alignment to non-financial support Application in Romania

13. Private Sector and Public Sector partnership has been a key to the success of the ‘Celtic Tiger’ What can be learned in Romania? In Conclusion