Start-ups now better placed to secure finance - VC firm

START-UP companies are in a better position to secure finance than in 2006, one of the country’s leading venture capital firms has said.

Speaking at a KPMG briefing on finance for innovative companies yesterday, Niall Olden, managing partner of Kernel Capital said that because start-ups are, by definition, debt free, they have a major advantage when sourcing finance.

In addition, because their competitive cost base may be higher, start-ups are in a better position than more established companies to attract finance, he said.

“In general, operations costs are falling but also for a start-up, [their] competitors’ costs could be significantly higher, particularly if they’re coming from a legacy cost-base of boom time salaries, boom time leases and rents etc,” he said.

Barry Maloney, partner with Balderton Capital, said the current economic climate is “totally irrelevant” to the work of venture capital companies because of the time-scale involved in the venture capital industry.

“The current financial difficulties are totally irrelevant to what we do. If we invest now, we’re interested in what’s going to happen in five years’ time.”

Mr Maloney also called for a revision of the policy of taxing stock options for entrepreneurs.

“It’s an absolute no-brainer. It should be taxed as capital gains. It’s going to cost the country nothing. The impact it’s going to have on people who are working in that sector, who are in start-ups, who are taking the risks, who don’t have a pension, would be huge.”

Mr Maloney told delegates from the investment and business start-up communities yesterday that while Ireland is one of the global leaders in terms of its engineering and technical skills, its expertise in sales and marketing, particularly in terms of scaling businesses into international markets, was weak.

He said it was essential that any business idea seeking investment must have the potential to scale internationally and to adapt its management team and strategy as needed.