gerard o brien ei bes scs presentation cork

Financing New and Expanding Companies

BES & Seed Capital Scheme and the Role of Enterprise Ireland

12th November 2007Cork

Gerard O’BrienHigh Potential Start Up DivisionEnterprise Ireland

www.enterprise-ireland.com

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

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


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”


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 31/12/08Seed, start up and expansion stages for small and medium

From 01/01/09Seed, 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 1st investment since 1st 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 1st 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 EI’s role in certifying you or a

client for BES/SCS

Gerard O’Brien Tel: 01 206 6433 [email protected]

mailto:[email protected]

gerard o brien ei bes scs presentation cork

Economy & Finance

high potential

ei approval

enterprise

development

irish owned

expansion

expansion

companies