Speech by Minister Micheál Martin to European Technology Tour

Keynote Speech by the Minister for Enterprise, Trade and Employment, Mr Micheál Martin TD, at the Gala Opening Dinner forthe European Technology Tour Wednesday, 10November 2004, Mansion House, Dawson Street, Dublin 2

I am delighted to be here this evening to formally welcome the Tech Tour to Ireland. I understand that four Tech Tours are run each year, and the Irish Tour is the final one of 2004. The Tour has already been to Israel, England and Russia this year. We recognise the Tech Tour as a unique bringing together of the International Venture Capital sector with local businesses that are seeking investment.  The next couple of days present a major opportunity to profile Irish business on the international stage. It will also, hopefully, refresh world opinion with regard to Ireland as an excellent investment location and it will establish even closer links with key members of the global investment community.

The Tour comes to Ireland at a most interesting stage in the evolution of the investment sector in Ireland.  A number of mutually reinforcing elements have come together over the past decade to foster an investment-friendly environment. These include:

the growth of a vibrant Venture Capital industry;

the development of a culture of entrepreneurship;

increased investment in Education and Research and Development at all levels, from basic research, to applied research and company-led research;

the emergence of a significant number of fast growth companies in new sectors;

the development of a policy of internationalisation within those Irish companies; and

the emergence of a proven reputation of Ireland as a good place in which to invest.

Ten years ago the Venture Capital industry in Ireland was relatively underdeveloped. However, as part of the Operational Programme for Industrial Development 1994-1999, an EU Seed and Venture Capital Measurewas set up with the objective of stimulating the establishment of new Venture Capital Funds to provide early stage funding to new enterprises in Ireland. Fifteen separate Seed and Venture Capital Funds were established under this Programme, the first of which was launched in May 1996.

Under a further recent Seed and Venture Capital Programme (2001 - 2006), Enterprise Ireland has committed an additional €95m to continue to develop the availability of venture capital funding for small and medium sized enterprises in Ireland. This Programme has also committed to 15 Funds some of which are specifically targeted towards:-

exciting new SMEs at their very early stage of development;

regionally based funds, thereby increasing the availability of seed andventure funding in regions outside of Dublin;

stimulating investment in specific targeted growth sectors such as biotechnology and life-sciences.

As you will be aware, these Funds are independently managed by the private sector, which makes all investment decisions on a commercial basis. In 2003, Irish Venture Capital companies invested €33m in 106 start-ups and early stage companies. In the same year, the Irish Government, through Enterprise Ireland, supported the establishment of 61 new start-ups with high export growth potential.

Of course funding alone is insufficient without a thriving business culture. Without entrepreneurship and the emergence of suitable companies in which to invest, there can be no growth. We have here in Ireland a rich source of people with new ideas who are prepared to take risks and turn ideas into businesses. The Global Entrepreneurship Monitor Study for 2003 attributes a `total entrepreneurship activity index' to Ireland of 8.1%. This means, that based on current population figures, there are about 200,000 entrepreneurs in Ireland at present.

The Global Entrepreneurship Monitor Study for 2003 ranks Ireland number two in EU in terms of entrepreneurship. So we have a higher proportion of entrepreneurs per head of population than most other European countries, with the drive and ambition to grow businesses capable of competing in world markets. Over the past 10 years the number of new high growth start-ups with significant export potential has more than tripled. The vast majority of these companies are focused on growing and competing in world markets. The opportunities for inward investors to Ireland are very clear.

As a Government, we have done a lot over the last number of years to help the high-tech sector to develop and grow. An essential part of the process of creating high tech companies, as our Venture Capital colleagues well know, is a support mechanism for translating the outcome of research into a profitable business. The Irish Government, through Enterprise Ireland, is actively working with Third Level Institutes to ensure that the maximum potential is derived from applied research - both in terms of new business establishment and technology transfer. Substantially increased public funding for Science and Innovation has been made available in recent years and particularly in the National Development Plan. This significant investment by the State in Science and Technology is intended to create a vibrant and well-supported research community, giving a substantial resource for technology solutions and the basis for a stream of technology-based start-up companies.

Science Foundation Ireland is spearheading Ireland's drive for excellence and is giving us a new capacity in research at a scale we previously lacked. Since its establishment in 2000, SFI has awarded over €396million to support more than 1,038 individuals, research teams, centres, and visiting researchers in creating the knowledge and driving the discoveries to underpin future competitiveness in key industries. One of the most significant programmes operated by SFI is its Centres for Science, Engineering, and Technology (CSETs) to support researchers who will build collaborative efforts that link academia and industry. SFI has now invested in six Centres which have the potential to transform the research agenda and involve substantial academic-industry collaborations with major companies including, HP, Intel, Servier, Medtronic and Proctor and Gamble and Bell Labs.

The firm commitment to make scientific research and development the foundation stone of Ireland's innovative and future growth is further underscored by the formation of a new Cabinet Committee on Science, Technology and Innovation to be chaired by An Taoiseach, Mr Bertie Ahern, TD, the appointment of Ireland's first Chief Science Adviser, Dr. Barry Mc Sweeney, the establishment of an Interdepartmental Committee to service the Cabinet Committee and the renewal of the Stakeholders voices in this area. Earlier this year the Government launched Ireland's Action Plan " Building Ireland's Knowledge Economy". The Plan which assesses how Ireland should contribute to the overall EU target of 3% of GDP spend on RTI by 2010, two thirds of which is to be met by the private sector, sets a target of 2.5% of GDP spend on R&D by 2010 and proposes a range of actions to achieve this. The Report outlines the real challenges we face if we are to be amongst the best in the world in terms of performance in this key area of economic and social activity.

Hightechstart-up companies are emerging from a number of backgrounds. Some are the direct result of research in our Third Level Institutions, resulting in the creation of campus companies. Others are serial entrepreneurs that have realised value from their previous businesses and are prepared to re-invest in new ventures. In terms of sectors - up to 3 years ago the IT sector, and software in particular, would have dominated the start-up profile of high growth start-ups, but today emerging businesses in new sectors such as biotechnology, medical devices and functional foods are becoming more commonplace. These are new areas of opportunity where we have a strong research base.

The emergence of new firms in these sectors is further evidence of a fundamental change in our industrial structure that is underway. New technologies and new applications of existing technology are presenting novel areas of opportunity in sectors where Ireland has a strong research base. The commercialisation of technology from this research base is a key priority so that growth-oriented companies will emerge in these cutting edge sectors. This solid foundation needs to be accompanied by international collaboration to facilitate entrepreneurs to develop the next wave of internationally successful Irish owned companies.

The emergence of a genuine culture of internationalisation in Ireland is enhanced by the involvement of international investors.

Sustaining a genuinely international culture is dependent on on-going collaboration with international businesses and investors such as those that are here tonight. The increase in new start-up numbers, in a time of tough global trading conditions, indicates that the culture of entrepreneurship in Ireland is strong. It is built on a solid foundation of innovation and intellectual capital and requires a partnership with international organisations and institutions if these businesses are to grow on world markets. This is a key focus for the Tech Tour.

The policy of internationalisation followed by the Government and encouraged within these companies and sectors has led to the development of a global indigenous sector in Ireland.  It is in this international sector that opportunity exists for co-operation between Irish businesses, Irish VCs and you - the international investors.

The forces of growth are firmly rooted in Ireland's economy, through favourable demographics, increasing investments in education and a high rate of technology-oriented investments. Ireland's economic growth rates in recent years have consistently been among the highest of the OECD countries. We have a young workforce, the youngest population in Europe with over 40% under the age of 25 years. We offer one of the most beneficial corporate tax environments in the world. In our schools we teach our children about economics and entrepreneurship. We tell them that three things must come together to make a truly robust business culture: labour, capital and enterprise. Ireland has these three factors in abundance.

The vision for Ireland to be achieved is of an economy and society where a significant proportion of enterprise has become technology-based and is robust in the face of international market developments; where higher standards of living are being enjoyed by ever increasing numbers of people; where enterprise, higher education institutes and the State constitute a vibrant research partnership, particularly in the key enabling technologies; where attractive employment opportunities exist for researchers in science, engineering and other disciplines; and where Irish society has become fully aware of the economic and social benefits of scientific and technological development.

I would like to emphasise the opportunity that is available to our indigenous companies over these three days to demonstrate your abilities to a captive audience of serious investors. It is also an opportunity to showcase and develop Irish entrepreneurship, innovation and excellence, and I set you the challenge to take maximum advantage for yourselves and for Ireland and to ensure the best possible return from your engagements over these couple of days.

In conclusion, I hope that the investment community will work with us to build on and capitalize on Ireland's `natural resources' and we look forward to you sharing in the returns. I thank you for your participation in this Tech Tour and for the interest you have shown, through your attendance, in Ireland as an investment location. Thank you, have a very enjoyable evening and productive visit here in Ireland.

ENDS

ETE 1279