Financing New and Expanding Companies

1. Financing New and Expanding Companies • BES & Seed Capital Scheme and the Role of Enterprise Ireland • 12th November 2007 • Cork Gerard O’Brien High Potential Start Up Division Enterprise Ireland

2. 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).

3. 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.

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

5. 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 6th September 2007 • Effective 1st January 2007 to 31st December 2013 • However “Terms & Conditions Apply”

6. 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

7. 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

8. 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.

9. BES Qualifying Requirements and EI Role

10. SCS Qualifying Requirements and EI Role

11. 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

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

13. 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 1st investment since 1st Jan 07 • Companies required to make declaration of BES/SCS received

14. 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,

15. 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 1st of January 2007 that could convert to BES, Enterprise Ireland approval must also be reduced.

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

17. 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

18. 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 EI’s role in certifying you or a client for BES/SCS • Gerard O’Brien • Tel: 01 206 6433 • Gerard.obrien@enterprise-ireland.com