It has been a week since we woke to the shock result of the UK deciding, by referendum, to leave the EU has sent ripples across the business world.
In the immediate aftermath our thoughts turned to how this decision impacts the relationship between our homeland and London. How are our rights affected? Will I need a visa? Will I pay more tax? These are just a few of the personal questions Irish immigrants face.
Politically there are more questions to answer about the UK’s relationship with the EU, with Ireland, the border with Northern Ireland and the Common Travel Area. There was a huge surge in applications for Irish passports from the UK which severely affected the Department for Foreign Affairs systems. The below Google search analysis shows a serious spike in searches for applying for an Irish passport in the immediate aftermath.
There are numerous commercial challenges that Irish & UK firms will now face, with major uncertainty as to if there will be free trade between nations and how easy it will be for Irish firms to do business in the UK, and vice-versa. Additionally many global operators are considering whether to relocate to another EU country, to ensure continuity in their free trade and passporting. Although it’s worthwhile pointing out that all of these are rumours and merely options that could be on the table. Nothing is certain yet and there are a lot of negotiations that need to take place at state and EU level before anyone has clarity or certainty.
With that in mind it’s worthwhile listening in to the podcast from our pre-Brexit debate to hear the thoughts of Brian Kennelly QC, who speculated on the types of negotiations that now need to take place. Brian is extremely experienced in this area and it’s certainly worth a listen.
My thoughts now turn to tech, and the impact on the tech scene in Dublin and London. There have been numerous articles written on this, which has got me thinking….Is London’s goose cooked for tech? Hardly! But as Aoife White, Dara Doyle and Jeremy Khan report in this Bloomberg article – Dublin just became a whole lot more attractive!
Ireland in general, but Dublin in particular has always been a major draw for tech firms. Apple have a huge operation employing >5000 people in Cork and there are major operations for the likes of Google, Dropbox, Airbnb, Linked In, Facebook & Twitter to name a few residents of the “Silicon Docks”. While Microsoft are building a huge campus in Sandyford to replace their already large offices there. These firms are attracted by:
- Deep and developed talent pool comprising a highly educated and multilingual workforce
- Native English speakers
- EU location
- Competitive, transparent corporate tax structure
- World Class research capabilities
- High availability of supports available.
- High quality of life
These companies are well known globally, however there are some other facts about Ireland’s tech eco-system that may surprise you.
Ireland has some of the biggest (and best) data centres in the world located there (its nice and cold). Anyone who has migrated to AWS will know this. Several of the aforementioned firms have built huge data centres around Ireland and Apple want to invest nearly €1bn in building a data centre in Athenry. This will be a key consideration in the Brexit negotiations due to the requirements to store data only within your home state or within the EU (which effectively acts as a home state). So now we have a situation whereby firms need to assess where they house their data? Ireland & The Netherlands are two of the biggest players here and many UK firms use data centres in these countries – will we now need to see an explosion in the building of data centres in the UK to house all that data they need to store at home now? Likewise will companies trading with the EU need to migrate some of their operations from a UK data centre to an Irish data centre? There are lots of challenges and opportunities here!
The start-up scene in Ireland is hopping! There are a huge number of indigenous Irish tech startups operating across the spectrum from fin-tech to med-tech, travel-tech, ed-tech, agri-tech, SaaS and blockchain technologies. In Dublin alone there are over 1200 startups and Ireland is one of Certainly we here at LIBS have found that the 8 businesses who have pitched at our 2 tech-startups events have been extremely innovative and full of talented people and they have built some fantastic products. You can check out the podcasts here from December here and we’ll be sharing the podcast from our recent event in Google shortly.
Traditionally what drove London to being the pinnacle of European tech cities was the ease of raising finance and the availability of talent, combined with an open market and culture of innovation. While Ireland has three of these things in abundance it has always lagged behind when it came to finance, certainly compared to Silicon Valley, Tel-Aviv and London.
However now Irish tech startups are finding it increasingly easy to raise the capital they need to fuel their growth. In 2015 they raised over €500m in funding! Lately Intercom have just raised €44m sparking a potential Unicorn valuation. Nearly 50% of capital raised in Ireland (according to the Irish Venture Capital Association) is now coming from international investors, predominantly in the US. While these investors may be feeling the jitters of uncertainty right now, in a post-Brexit world Ireland is still a member state of the European Union and still holds almost all the advantages it did last week (common market access, talent pool, etc).
So is this advantage Ireland in a post-Brexit world? Niamh Bushnell, the Dublin Commissioner for Startups, has certainly come out swinging! In the immediate aftermath of the result making a call for Ireland to enhance it’s already very strong FDI offering and position Ireland as the best place in Europe to launch a startup. Niamh certainly makes a very strong pitch highlighting the advantages of Ireland when it comes to starting an innovative business and the benefits to Ireland for bringing them in (a strong ecosystem of innovative businesses is very attractive to both the best businesses and the best talent). The Irish Government have also recently launched Tech/Life Ireland, a major campaign aimed at attracting the best and brightest tech talent to Ireland. Startup Ireland are doing great work to position Ireland as a global startup hub to rival any other by 2020 while there are serious moves to make Ireland the blockchain capital of Europe, and that’s a technology with the potential to transform all financial services!
It should be noted that Ireland’s startup scene is still very much in its infancy. While Dublin may have >1200 indigenous businesses, London for example has >275,000! Check out the data at http://www.startuphubs.eu/#. It’s the undisputed number 1 hub in Europe. Without doubt the London startup scene will remain strong, London is a world-leading city and that has not changed. Businesses will continue to thrive here and it will remain the tech heart of Europe, even outside the EU. However it is going to face some very strong competition from Berlin, Amsterdam, Stockholm and Barcelona, to name a few. Tel-Aviv will also continue to perform very strongly and Tallinn in Estonia also making great strides (did you know you can become an e-resident in Estonia to open a business?) and Lisbon are pushing really hard to establish themselves, especially after pinching the Web Summit! But as the sole native English speaking capital city left in the EU, Dublin certainly looks a good bet to capitalise on whatever opportunities emerge from Brexit.
So what does Ireland need to do/keep doing to take advantage?
- Back Enterprise-Ireland with further resources to help people start businesses. The EI team are fantastic and a great resource for anyone seeking to start a business in Ireland.
- Also simplify the process! The Estonian e-residency system is fantastic!
- Let the IDA and others keep doing their excellent work in attracting FDI! Like it or not the top tech firms in the world are the oxygen that will fuel Ireland’s growth! They also employ thousands of talented people who may well take the plunge and start their own business.
- Continue to relax bankruptcy legislation in Ireland. We must make it easier to start, run and in some cases fail a business. One of the great mantras in lean startup culture is “build-measure-learn”, some of the greatest learning will be in failure. The US, UK and others do this way better than Ireland.
- Maintain the corporate tax rate but continue to re-focus other taxes away from discouraging entrepreneurship. The recent cut if CGT is a good start.
- Build a proper credit bureau in Ireland! Not all startups will be backed by VCs, some businesses and their founders will need more traditional credit lines but at the moment the standards for credit checking are not good enough! This doesn’t make it easy for lending operations to make credit decisions. Luckily the CBI have started to make some headway on this, recently appointing CRIF to build a Central Credit Register.
- Position Dublin as best as possible to capture any finance operations leaving London, particularly those engaged in seed or VC funding.
- Keep growing the talent pool! There are countless engineers, QAs, product owners, finance professionals and more who are either Irish emigrants or from the wider EU family. To be the best we need the best! Make it an easy decision for them! They may even start a business!
If you’re interested in startup culture be sure to check out Eric Ries’ book “The Lean Startup,” a brilliant read for building and scaling a startup.