Best Place to Start Activating Dublin Tech Startup Report

A n Ac t ivat in g Du b lin in it iat iv e

Activating Dublin: #bestplacetostart

A report on maximising the potential of the Tech

Startup ecosystem in Dublin

1

Mission

Objectives

Prize

Opportunities

Strengths

Dublin recognised as the #1 EU hub for tech innovation where companies will start up, scale faster, live longer and go further;

double the domestic rate of aspiration to start a business; sustain Dublins thriving startup ecosystem; and create at a minimum 2,800 jobs and contribute 200 million p.a. to the Dublin economy.

Thriving organic ecosystem (NB: dont try to control) Supportive base of international companies (eg Google,

HP, PayPal, Intel, FB..) & investment promotion (IDA & EI).

Multiple high quality innovation centres available to startups (e.g. 3 of 8 Top European Accelerators).

Pro-business climate.

Make Dublin the best place to

start a tech business

Increase the number & quality of

startups, growth rate, employment

and overall economic contribution

of Dublins tech startup community.

This can be achieved through the

targeting of domestic

entrepreneurs & spin-outs,

international entrepreneurs, and

scaling startups.

Coordination | Greater coordination of the marketing, outreach and promotion of Dublin as the best place to start

(targeting domestic & international entrepreneurs).

Facilitation | Foster a more accessible and interconnected cluster eco-system (making it easier to start and providing

the right environment to grow & scale).

Regulation | Enhance a pro-startup regulatory environment and visa regime.

Executive Summary

2

Contents

Summary

Objectives and approach

Assessment of current position

Recommendations

Next Steps

3 Summary

Maximising the potential of the Tech Startup ecosystem in Dublin The following slides show the conclusions of a series of meetings and consultations held by a diverse

group of stakeholders chaired by John Moran, Secretary General of the Department of Finance, and

assembled under the auspices of Activating Dublin.

State of Play

Dublin is already a successful startup city, with a thriving ecosystem that supports a wide

range of startup tech businesses, in particular in mobile internet, telecommunications

software and digital gaming. The last two decades have witnessed significant growth and

the emergence of a dynamic entrepreneurial class. Strong informal networks have

emerged. Dublin is now home to a number of serial entrepreneurs and business angels,

with experience and capital available from building up successful businesses. Dublin also

houses most of the international hubs of the US headquartered technology companies.

The Opportunity

Building on that success, we believe that there is now scope to do more. With a more city

centric focus and better coordination, there is an opportunity to significantly increase the

startup company activity in Dublin. In particular, we believe that now is the time to:

position Dublin as a leading global startup centre, attract significantly more overseas entrepreneurs to Dublin to build their businesses, celebrate the successes with the wider business community, encourage the wider acquisition of STEM skills to fuel our startup tech businesses, and,

ultimately,

increase the sectors growth rate, employment and economic contribution.

4

Maximising the potential of the Tech Startup ecosystem in Dublin

The Prize

Through the recommendations outlined, we believe that efforts to promote and market

Dublins competitive advantages (high level of seed funding, strong multinational base, successful tech clusters) abroad and encouraging collaboration at home can:

help Dublin become the #1 EU hub for tech innovation where companies will start up, scale faster, live longer and go further;

double the domestic rate of aspiration to start a business;

sustain Dublins thriving startup ecosystem; and

create at a minimum 2,800 jobs and contribute 200 million p.a. to the Dublin economy.

In the US, companies less than five years old created

44 million jobs over the last three decades and

accounted for all net new jobs created in the U.S. over

that period. In 2007, alone 8m of the 12m new jobs

created were from young firms.

Scaling to Irelands population for that same period would be equivalent to creating 630,000 jobs.

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Contents

Summary



Recommendations

Next Steps

6


Origins of Report

In its initial assessment of ways to make Dublin a better place in which to live and work,

the Activating Dublin Steering Committee identified enhancing Dublins position as a Startup City is an initiative that offered significant potential. The initial assessment

recognised the existing and significant activity that already occurs in this sector, but

concluded that with better coordination and promotion we could do much better.

Working group

A working group was established and requested to assess this proposition, i.e. to

determine what actions could be taken to enhance the startup activity in Dublin and to

report back to the Activating Dublin SteerCo. The working group members and some of

those consulted with as part of the work are set out in Appendix 1.

In looking at the startup sector the working group has focussed on technology and other

fast growth companies that are high growth and have a focus on international markets.

These companies focus on new technologies that create new markets or are a

disruptive force in existing markets. They require specialist skills and venture funding,

but by their nature do not access traditional bank finance and tend not to place much

reliance on domestic markets. As a result, this sector has not been as affected by

issues with credit supply or domestic demand caused by the economic downturn.

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Process of report development

Working

Group

Initiative themes

- Coordination

- Facilitation

- Regulation

Report

Initiative

Workshops

Working

Group

The initial assessment by McKinsey & Co included:

Conducting a baseline of Dublins position on key indicators and benchmarking against comparator cities,

and

Consultations with more than 100 diverse multi-sector stakeholders from public, private, and social sectors to

identify key themes for future regional development

Based on these finding a Working Group was set-up with

specific experience in this area. Building upon the original

analysis and the experience of the group the three key

themes to address were identified:

Coordination Facilitation Regulation

Separate themed workshops were conducted by the theme

leaders drawing on expertise and knowledge along these

lines.

The group also engaged internationally with those in the

startup community to find best practice.

Based on this work the Steering Group has compiled the

following report with recommendations and a delivery model

to implement the recommendations.

Activating Dublin consultation & analysis

Activating

Dublin Steering

Committee

8

Principles on approach advice from HBR | what we took from it

Source: How to start an entrepreneurial revolution (Harvard Business Review)

Governments around the world have a somewhat

misguided approach to building entrepreneurial

ecosystems by trying to replicate the gold standard of ecosystems Silicon Valley.

The Harvard Business Review identifies 9

principles for creating a thriving entrepreneurial

ecosystem:

1) Stop emulating Silicon Valley

2) Shape the ecosystem around local

conditions

3) Engage the private sector from the start

4) Focus resources

5) Get a big win on board and over-celebrate

the successes

6) Tackle cultural change head on

7) More finance is not necessarily merrier

8) Dont over engineer clusters; help them grow organically

9) Removing administrative and legal barriers

to startup formation its better than creating incentives to overcome these

The working group has considered the 9

principles, and incorporated them into our

conclusions as follows:

1) We have sought to identify certain aspects of

what other successful centres are doing and

see if we can adapt, but not mimic other

centres.

2) Dublin has a thriving ecosystem: we should

not try to control it. We must help it grow

faster than competition by supports and ideas.

3) Private sector & entrepreneurs are a driving

force.

4) By necessity our resources are focussed.

5) We have targeted some big initial wins.

6) Our cultural challenges are around issues like

Government cannot do it, only private sector can and There is a unit with this remit already.

7) There is available capital for good ideas.

8) We have a startup cluster and need to look for

gaps to help it grow.

9) Were already good at being pro-business but can do better for startups.

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Reviewing whats in place and working well

In approaching the working groups work we have taken account of remits of National and Local government groups and bodies in supporting the startup sector. There are a myriad of

supports and initiatives in place to support startup businesses.

The working group has tried to identify where action is taking place by multiple parties and

where better coordination is necessary (see appendix 2-5). Initiatives need to be balanced

between those that constitute direct intervention and those that are more supportive.

Excessive intervention in areas such as the existing networking arrangements of developers

and designers (though informal hang-out industry groups) cannot and should not be controlled: the symbiotic relationships across these different groups requires a benefit for

both and we have suggested where necessary how this can be done.

The next phase of our work will be to develop in-depth business casing of the proposals to

see how they could be implemented or in some cases to look to pilot initiatives or implement

directly.

Source: The Cluster Initiative Greenbook ,

http://www.isc.hbs.edu/Greenbook.htm

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Contents

Summary



Recommendations

Next Steps

11

The origins of the Dublin startup sector

Dublins tech startup scene emerged in the late 1990s as a natural progression from the previous decades of industrial development which was based around foreign direct

investment. Successive governments and IDA Ireland had persuaded a number of major

global technology companies to locate initially manufacturing and subsequently business

hub and research and development activities in Ireland. While Enterprise Ireland and

Enterprise Boards have worked to develop indigenous startups.

IDA have successfully tracked the changing dynamics of the technology industry as the

latest wave of born on the internet companies have chosen Ireland (and Dublin) as a centre for their international operations. Similar successes have occurred with digital

gaming companies.

Although manufacturing activities have been relocated to low-cost locations, Dublin remains

a key international hub for technology companies. The importance of the linkage and

engagement by MNCs & Startups is

particularly important in maximising Dublins potential.

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The origins of the Dublin startup sector

From these origins an indigenous technology sector has evolved. Many of the early startups

were founded by people who left the FDI companies, but more recently our universities and

colleges have delivered a cohort of highly skilled and entrepreneurial graduates directly into

this thriving sector. Enterprise Ireland has built a programme of agency supports to help

these companies to grow covering, inter alia, funding, management training, grants (e.g.

research & innovation) and export support.

A thriving ecosystem has developed around these indigenous companies with venture

capital, agency support, accelerator programmes, coding and design skills and a pro

business regulatory framework contributing to an environment where a number of world

class startup technology companies have emerged.

Dublin is currently a hotbed of tech innovation with more than 200 tech focused startups based in incubators around the city and region.

Supporting this is a healthy availability of seed funding with Ireland amongst the top three European countries for VC investment per % GDP (European Venture Capital Association

2012).

Pro-business with Ease of Doing Business rank in top 15 of 185 countries (World Bank). Dublin is also home to three of the top ten tech accelerators in Europe (TechCocktail).

This strong base offers Dublin a huge potential opportunity to grow amongst the top

performing startup ecosystems in a sphere where competition is fast & fierce.

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Dublins thriving Start Up Eco-System

Business & Sales

Designers Developers

IXDA

Craft

Refresh

UXPA

Tech P. Dublin

Beta

Python

meetups

Ruby

meetups

Node.js

Angels / Mentors / VCs . banks

Incubators / Accelerators

Multinationals

IDA / EI / Enterprise Boards

* At the core of a

startup founding

team there are three

roles: Developer,

Designer & Business/

Sales people

Space

Legal

Accounting

Comms &

networks

There are over 20

informal gatherings of

developers, designers,

etc. on a weekly or

monthly basis in Dublin.

Dubstarts

Universities

Adapted from Eamon Leonards contribution at workshop

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There are already the key components in place, excerpts from

The Irish Tech Startup Guide

Available at http://www.slideshare.net/FrontlineVC/the-irish-tech-startup-guide produced by Frontline Ventures

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Dublin has the startup assets necessary to be a world class tech startup hub

TOP 8 EUROPEAN STARTUP

ACCELERATORS AND INCUBATORS

RANKED

Seedcamp Pan European

Startupbootcamp Tetuan Valley (Spain)

Startupbootcamp Eindhoven

Springboard London / Cambridge

Openfund Athens

NDRC Launchpad Dublin

Propeller Venture

Accelerator Fund

Dublin

Startupbootcamp

(HealthXL)

Dublin

Source: Independent Study commissioned by

TechCocktail - http://tech.co/top-8-european-startup-

accelerators-and-incubators-ranked-seedcamp-and-

startup-bootcamp-top-the-rankings-2011-06

Venture Capital Investments as % of GDP (2012)

http://www.evca.eu/uploadedfiles/home/knowledge_center/evca_research/2012_Pan-European_PE&VC_Activity.pdf

In the EU, Ireland is ranked first by the World Bank for

ease of starting a business and consistently in Forbes top list of 'Best Countries for Business' report.

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But against this background, there are challenges that are inhibiting

further success International competition is fierce, with other locations looking to capitalise on branding

themselves as a startup city and target globally mobile entrepreneurs or investment

capital. Dublins position as a startup city is not fully acknowledged in the international surveys, even if we are accepted by many as the Tech Capital of Europe.

Capacity Issues

Our incubator/accelerator units are near capacity, with restrictions in many of the units.

Moreover, they have each developed on their own separate momentum (e.g. University

patronage, private sector or public sector patronage) with limited coordination or

communication between these incubators/accelerators.

'We have certain skill challenges we government is seeking to address, such as through

doubling of ICT graduates by 2016, and other challenges remain around languages and

professionals in the ICT sectors (National Skills Bulletin 2013). We need to be able to

assemble technological and language skills that are not necessarily available locally, so

the ability to attract in global talent is important.

There is also a sense that the general business and wider community is unaware of the

strengths of the sector, in terms of encouraging individuals to participate or to invest.

Finally, although our enterprise agencies do a good job, they have a national remit and

therefore promote Ireland rather than Dublin. There has been a lack of ambition to be a

European sized city hub.

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The competition is fierce

Most Active Startup Cities

Source: SeedTable

Silicon Valley remains worlds largest and most-influential startup ecosystem. It is not the only important startup ecosystem in the world as other locations seek to emulate it.

Competition across Europe has become fierce, with national governments promoting their

cities and regions:

The UK government pledged 50m for East London's Tech City part of a plan to better support fledgling technology startups

The French government is creating a world-class incubator in Paris for 1,000 startups Berlin is using its low cost/highly qualified labor, very creative city, low cost living, &

cosmopolitan reputation

The Startup Genome Report on top 20 Startup Ecosystems in the

world did not rank Dublin a real missed opportunity even if the survey methodology is imperfect.

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The lack of coordination between Dublins startup centres & key players may lead to a lost opportunity

Strengths

Supportive base of international companies &

investment promotion

Multiple high quality incubation/innovation

centres available to

startups

Pro-business climate

Gaps

A distinct lack of one story for Dublin

Treatment of each area as a cluster in own right rather

than part of a Dublin cluster

Making pro-startup policies more clear, concise on

regulation and being a

world leader on approach to

immigration & visa process

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Contents

Summary



Recommendations

Next Steps

20

Our recommendations

1. We believe that there should be a

single strategy for Dublin as the

best tech startup city, backed up

by the resources & accountability

to deliver that strategy through

coordination across government

agencies, local government and

the other members of the startup

ecosystem.

2. We have identified three key

strategy areas around our themes

of coordination, services and

regulatory supports.

3. We have scoped six further

recommendations to turbocharge

our Tech Startup City.

Our recommendations are broken down into one overarching

recommendation and six further recommendations that are

grouped around three themes:

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Our recommendations

Provide coherent coordination,

marketing, outreach and

promotion to tell a one city

story

Ensure the regulatory

environment is pro-startup and

is viewed as open to

international startups

Promote a

coherent story for

the city to attract

high quality

startups

Support

stakeholders to

build linkages and

create new high

intl profile activities

Improve & clarify

current regulations

that support

startups in Ireland

Develop a new

streamlined visa

process for

international

startups &

investors

Help startups find the services they

need so they can focus on starting &

growing their businesses (e.g. office

space, legal, accounting..)

Provide one-stop

portal to help

startups in search

of supports &

services

Identify & address

gaps in Dublins cluster linkages to

maximise growth

& scaling in the

cluster

Make Dublin the best place to start a tech business. This requires a single regional strategy and the tools, resources & people to deliver it.

Governing mission/

overarching recommendation

Key Strategy Area

Deliverables

1

2 3 4 5 6 7

Strategy objectives

Coordination Facilitation Regulation

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Overarching Mission | Agree a Single Strategy for Dublin

Startup activities in Dublin are supported by national agencies (EI/IDA), local authorities

and through a number of incubators and supports. However, there is a lack of

coordination of messaging which may undermine the efforts of many in this space.

The National Competitiveness Council has stated that - the key challenge for

successful cities has been to develop coordinated policies across existing institutions

for tackling problems and developing solutions, rather than the creation of a single

citywide governing entity.*

Pressing need for a single clear Dublin-centric strategy and a coordination of effort.

Dublin City Councils Dublin Digital Masterplan is an encouraging recent development that sets a vision of making Dublin a global leader in innovation where technology is harnessed, adopted, adapted and created to develop economic competiveness and a

cohesive and sustainable society.

This comes at a time when Dublin City Council are going through a major re-

organisation with the integration of the Docklands, Enterprise Board and Digital Hub. In

addition, other agencies/bodies in this area are looking at their overall strategy now is an opportune time to agree a single strategy.

*Source: Our Cities: Drivers of National Competitiveness, Forfs/National Competitiveness Council, April 2009, Section 2, The Governance of Cities is Complex, page 17

1a

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Overarching Mission | Responsibility for the Strategy

Put in place a Champion/ Commissioner for Startups:

Full time leadership Accountability & responsibility for the strategy Facilitator who startups see as their key contact when hitting a barrier Works between Local & Central government Metric driven (see recommendation 1c)

Suggested Job specification: Experience in a startup as a founder Knowledgeable in the tech company space A positive, "can do" attitude with a track-record of assisting entrepreneurs/SMEs Strong communication and advocacy skills

Experience working with relevant local & central government officials providing services and information to startups and entrepreneurs

Credible & capable advocate and adviser for startups Problem solver

familiar with the specific challenges facing startups, possibly through experience working with startups

An ability to support startups with their requirements when dealing with public procurement / operating in a number of jurisdictions

Organisational skills - ability to assign resources, prioritise tasks

1b

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Overarching Mission | Good quality metrics driving strategy delivery 1c

We believe that progress must be measured, to ensure that initiatives are effective and

allocation of resources is optimal.

Need for Reliable Statistics

The working group found it challenging to obtain reliable statistics on the exact size of

Dublins startup sector. Not all companies are registered with or receive support from agencies. Not all startups seek to locate in incubation hubs initially, some share with other

companies or locate suitable space.

There are challenges in determining the extent of investment in startup companies and in

the available funding, although we received strong anecdotal evidence that funding is a

available for good quality startups, with the possible exception of larger expansion amounts

where companies typically look to international VC firms to participate in funding rounds.

Community Sharing Data

Given the challenges in accessing reliable data we believe that there is a need to work with

the community on obtaining better data on activity levels in the sector, to inform policy

decisions and this must be done as an initial step.

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Overarching Mission | Aligning resources towards the Strategy

Even with a person responsible for the strategys delivery there will remain a need to:

provide a single clear focus point in the city for the services for startups,

help navigate the existing fragmentation of many agencies and units involved, and

create an approach that is startup focused.

A single unit/organisation should be responsible for

delivery for the objectives and recommendations set

out in the report. This should build on the

recommendations in the Digital Masterplan to

establish a business accelerator team.

At the moment, however, many of these functions are

in some case already being delivered in part by

agencies or units with other core functions. This

integration should be achieved through the re-

organisation with the integration of the Docklands,

Enterprise Board & Digital Hub currently underway. NYCs small business support website a best in class example of how to support business

1d

Younger firms are the largest contributors of new jobs due to the inverse

relationship between growth and size The Central Bank (Ireland), 2013

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Promote a coherent story for the city by piloting a group of key actors

working together on their message about Dublin

Source: The Cluster Initiative Greenbook,

http://www.isc.hbs.edu/Greenbook.htm

Dublin needs to establish its reputation as a

credible place for startups and

entrepreneurs to base themselves. Most of

the elements are already in place but there

is an absence of messaging and promotion.

We believe that this can be achieved by

immediately establishing a taskforce that will

leverage existing material to provide a

Dublin story. Their core mission would be to

provide coherent coordination, marketing,

outreach and promotion, then to make it

widely available.

2

Although we believe that the marketing deficit needs to be addressed as a matter of

urgency, there is strong potential that through success and trust building a group tasked

with promotion of Dublin could take on bigger objectives as similar projects elsewhere have

done.

The above illustration from international literature, shows how groups such as this have

similar objectives. The chart provides longer term insight of potential objectives for such

coordination.

*

*

*

*

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Taskforce to aggregate and support the use of material about

Dublins startup cluster Key participants

Innovation clusters and companies

Government Agencies

HEIs

Coordination

Outreach &

business

development

PR &

Marketing

Link agencies,

HEIs, hubs and

companies

together

Better organise

regional

outreach

Publicise

success

internationally

2

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Support stakeholders to build linkages and create new high

international profile activities

3

We need to support stakeholders in the startup ecosystem through a series of events and

activities that increase the profile of the sector. We have set out overleaf 14 individual

initiatives that we believe could be delivered over a two year period, to provide for better

linkages between the community and other actors in the space and to better communicate

the success of the sector.

The timing of certain recommendations is opportune: the build of the Luas extension gives

an opportunity to promote the startup sector on the site hoarding. A startup festival could be

held in conjunction with the already successful WebSummit. A Dublin based crowdfunding

initiative could provide a broader range of investors with a chance to participate in the

sector. Better linkages with the foreign-owned technology sector could help cross

fertilisation and carve out of redundant technology to startups where it can be better

exploited and commercialised. Local prizes and awards could celebrate the successes of

our startup businesses.

The coordination of the overall schedule of events could reside with the Dublin startup

office in our overarching recommendation. Individual events can be delivered under the

control of that office or by the community itself. We believe that it is important to have a

flagship event such as a Dublin version of the Mass Challenge (one of the worlds biggest

start up competitions based in Boston, Massachusetts) that is targeted at a global audience

could really help brand Dublin as a startup city.

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Initial proposals to support stakeholders to build linkages and

create new high international profile activities

Celebrating Success

Startup Billboard

Startup Festival

Engaging the MNCs

Startup Ecosystem

Fund

Dublin Mentor Panel

Incubator-MNC spinout

support

International Spotlight

Coordinate data on

cluster, publish

Made in Dublin

Booker Prize for startups

Empowering existing

community

Startup Dublin Survey

Dublin Startup CEO Forum

Dublin Startup Association

Attracting New startups

Startup Apprenticeship

scheme

Crowdfunding site for Dublin

startups

Flagship Project

MASS Challenge

125 Global finalist relocate to Dublin during 4 month accelerator period

3

30

Celebrating Success | Engaging the MNCs

Startup Billboard

No current activities in this space Potential includes:

Hoarding for Luas Cross City

Startup Festival

Similar to South by Southwest (SXSW)

Showcase success Link between culture &

innovation

Existing players: Dublin Web Summit Innovation Dublin You Bloom

3

Startup Ecosystem Fund

Funding for great ecosystem ideas Matching funding model community

and MNCs

Dublin Mentor Panel

Mentors from MNCs Link to Farmleigh Global Irish

Forum

Key existing actors: Accelerators

Incubator MNC Spinout Support

Crucial spillover effect of effective cluster

Existing programmes: Corporate Spinouts Startup Weekend Dublin

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International Spotlight | Empowering Existing Community 3

Startup Dublin Survey

Collaboration on a regional survey Start by circulation and commitment of

existing community

Dublin Startup Forum

Key players: Irish Software Association Informal networks

Dublin Startup Association

Offer reduced prices on software packages

Create a clear voice in the space Potential players:

Dublin Chamber, IIA, others

Coordinate data on cluster & publish

Ensure data collected, intl surveys completed eg Genome project

Potential players: IDA, EI or cooperative of centres

Made in Dublin

One Stop shop Portal for resources Key actors in space:

Deep Pool Proposal linked to recommendation 4

in this report

Booker Prize for Startups Prize so large that it makes a

statement

First mover advantage Potential player:

Royal Irish Academy

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Attracting New Startups | Flagship Projects 3

MASS Challenge

Options: 1. Destination (big building)

2. Event

Goal of getting international entrepreneurs into the country

Potential players: Dublin Web Summit

Startup Apprenticeship Scheme

Developing link to existing internship schemes to bring more into startups

Directory of interns & startups

Crowdfunding site for Dublin Startups

Links in with Dublin as a test bed Key players:

Fund:it Linked Finance

MASSchallenge Metrics, 2013 Funding raised by each class of entrants

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Provide one-stop portal to support startups in search of services

There are significant supports and services for startup businesses. These include local

and central government enterprise supports, incubation hubs, accelerators, office space

and required private sector service supports.

However, accessing the required services and supports can be challenging for

startups. Many services are also provided in a disconnected way and better coordination of

marketing and delivery of supports to startups can help the sector to grow. Questions like:

Where do I find space? What space is available to meet my growth aspirations? What agency supports are available? Who provides financial services or advice to startup companies? or What are my regulatory obligations?, can be hard for startups to answer.

There is a genuine lack of natural spin out space once companies are finished in

accelerator/incubator programmes. The planned build out of The Digital Hub to

accommodate this natural progression was affected by the collapse in the property market

and other centres do not provide for this natural progression.

The dislocation in the property market is also affecting provision of space to startup

companies:

Space is available but may require significant negotiation/interaction with NAMA.

Available space is often priced at uneconomic rates for startups. There are non-flexible leases in the most desirable locations. There is a lack of clustering of similar categories of startups across the city.

4

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Provide one-stop portal to support startups in search of services

Other startup cities are catching up with

Dublin through dedicated supports for

startups, to coordinate the provision of space

and services. Delivery of services can be

provided through the existing public sector or

private sector organisation, but coordinated in

a much better way.

An example of what can be achieved is

London & Partners, which is a collaboration

between the private sector service providers

(space, professional services, etc.) and the

city.

4

It provides a one stop shop of services to the startup community. We should introduce a

Startup Dublin portal that could help startups in the city navigate between:

National and local agency supports and programmes Incubator/accelerator space and programmes Other space solutions for growing startup companies Financial service solutions and providers for startups The main pillars of the regulatory framework affecting startups and those service

providers that specialise in advising start ups.

35

Identify & address gaps in Dublins cluster linkages to maximise network effects

5

All of the elements of a typical startup ecosystem exist in Dublin.

Our stakeholder consultations found that certain aspects are not operating at an optimal

level: be it space in accelerator programmes or flexible hot-desking solutions for

companies that are not yet ready for the fully commercial property market. Natural market

forces of the property sector mean that space is not always available to startups in optimal

locations (e.g. near fellow startups or larger companies with whom they collaborate).

Transport linkages between cluster nodes and other locations (e.g. universities/ research

centres) are not optimised. Such linkages are important for the companies & cluster. In

Silicon Valley, there is a doctrine that firms need to be within 20 minutes of their investing firm.1

Strong clusters contribute to the survival of startups and can significantly increase the

incidence of startups and their durability over time (33%-50%). 2

We recommend:

a follow up study to see what gaps exist in the linkages across the Dublin cluster, in terms of provision of space, presence of cluster interactions or transport linkages;

investigate if there is a private sector business case for a building as an icon for the startup community which would provide easy access to range of startup needs.

1 Its Not the People You Know. Its Where You Are, The New York Times, http://www.nytimes.com/2006/10/22/business/yourmoney/22digi.html

2 Delgado et al., Clusters and Entrepreneurship, Center for Economic Studies, 2010

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Example nodes in the Dublin Cluster (current & potential future ones)

with their transport links how do they connect?

5

Heuston Quarter/Digital Hub

DIT Grangegorman

Docklands

Luas

Luas

DART

Centres for Science,

Engineering & Tech

Co-working space

Meet-up spots

Accelerator/Incubator

Dublin bike locations

current and planned

20 minute rule:

Barrow Street to Digital Hub

Car 11min /peak 20+min

Bike 12min

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Dublins portfolio of incubators/accelerators

Main Supporter Location/Centre Accelerator/Incubator

Government Digital Hub / Liberties NDRC Launchpad

Telefonica Docklands Wayra

Irelandia DCU Ryan Academy / City West Propeller Venture Accelerator Fund

Polaris Venture Partners Docklands Dogpatch Labs

Startupbootcamp Ireland Docklands Healthxl

DCU Invent | DCU

UCD Innovation NovaUCD

Trinity College Dublin Launchbox.ie

EIs New Frontiers Eastpoint / Docklands DIT Hothouse

Guinness Enterprise Centre / Liberties Dublin Business Innovation Centre

National College of Ireland Business Incubation Centre

Trinity College Trinity Technology & Enterprise Campus

Enterprise Ireland Dun Laoghaire Institute of Art, Design &

Technology (IADT)

Media Cube

EIs New Frontiers Blanchardstown IT & Tallaght IT Synergy Centre

Source for majority of data: http://www.digitaltimes.ie/wp-content/uploads/2012/06/Incubator-programs4.pdf

5

38

9 of the top 10 Global Software Leaders are in Dublin and

8 of the top 10 US companies are here

5

PwCs Global 100 Software Leaders

1 Microsoft 2 IBM 3 Oracle 4 SAP 5 Ericsson 6 Symantec 7 HP 8 EMC (excl. VMware) 9 CA Technologies

10 Adobe

Source: Data was compiled by the Global Software

Business Strategies Group at IDC.

Fortune 500

US Companies 2013 1 Apple 2 AT&T 3 HP 4 Verizon 5 IBM 6 Microsoft 7 Amazon.com 8 Dell 9 Intel

10 Google

Dublins Multinational Companies can offer huge potential for startups; Greater engagement is an important cluster element to develop as there is recognition

from the tech MNCs that startups are a critical part of their digital community,

Mapping Dublins multinational landscape and how it links with the community will be a critical part of understanding the clusters gaps.

The IDAs Landscape project offers an important tool in this work - http://www.idaireland.com/app/landscape/

In Dublin

in Ireland

39

Sandyford:

Avid, EMC, Microsoft

Vodafone, Novell

CityWest: Adobe,

SAP Sage, Intel,

Sony, Xilinx, Ryan

Academy

Blanchardstown/

Damastown:

IBM, Xerox, Symantec, PayPal,

Creative Labs

While greatest concentration is at core (particularly of small startups),

companies have also located into groups on the M50 ring

5

Eastpoint:

Activision, Citrix,

Cisco, Oracle

Yahoo

Dublin 1 & 2:

Accenture,

Google,

Facebook,

LinkedIn,

Twitter

Ballymun/ Glasnevin:

Biomedical Diagnostic

Institute, Clarity, Invent

DCU

Belfield:

Clarity, Systems Biology

Ireland, NovaUCD

40

People with good skills are

available

Existence of informal networks

between cluster participants

Access to/availability of

customers

Availability of capital

Availability of other required resources (e.g.

space)

Availability of mentors and

serial entrepreneurs for companies

Access to HEIs for research/ transfer of knowledge

Reputation

(location recognised as

a cluster)

Anchor organisations, who define the

cluster

Linkages to suppliers and

advancements

Proximity (e.g. Silicon Valleys 20 minute rule)

Components of a cluster 5

41

The eastern sector contains multiple economic sectors that are now embedded in the Docklands Quarter the primary ones being in the financial, legal and digital spheres.

The western sector contains Digital Hub, St Jamess medical campus, Heuston Station and DIT at Grangegorman.

These character area nodes constitute a strategic economic arc and counterpoint to Docklands

and as a Gateway enjoy major links outwards to the city region and inwards to the central city.

Dublin City Council should seek to address the policies and objectives set out in the Development Plan

and where necessary complete the supporting research by the end of 2013 / start of 2014.

Follow up study to see what gaps exist in the linkages across the

Dublin cluster

This links to the Dublin City Development Plan RE12 To promote flexible buildings that facilitate work

clusters and affordable work spaces that develop in

proximity to each other so as to allow skilled self-

employed workers operate independently and also in

co.

RE22 (ii) To consolidate employment provision in the city by incentivising and facilitating the high quality

redevelopment of obsolete office stock in the city

REO11 To identify and map the existing and potential clusters in the city region and identify effective

supports to optimise the clustering benefits

RE22 (ii) To consolidate employment provision in the city by incentivising and facilitating the high quality

redevelopment of obsolete office stock in the city

5a

42

Accelerator program that will

encourage new high risk startups

in strategic areas such gaming

and cloud computing

Lobby

Relatively advanced companies

paying subsidized rents

Core space

Mature startups preparing to spin out of the cluster into

surrounding office space

Top floor

Investigate if there is a private sector business case for a building

as an icon for the startup community which would provide easy

access to range of startup needs.

5b

Example: Cambridge Innovation Center

(Boston/Cambridge) http://cic.us/

Accountants Solicitor Real estate agent Incubators/accelerators Administrative support Angels & mentors

Service support centre

43

Improve & clarify current regulatory framework for startups 6

Our stakeholder consultations found that the current regulatory framework works well for

startups, as would be expected given the positive rankings that Ireland enjoys (e.g. top 15

Easiest place in to start a business World Bank Doing Business Report). We have identified recommendations across four specific areas, as follows:

Access to public procurement

Access to finance

Tax initiatives

Administrative processes

Access to public procurement

Our stakeholder consultations identified difficulties for startup companies in accessing

public procurement opportunities, due to:

Significant administrative burden for each proposal

High costs to prepare proposals

Financial guarantees which are generally required

We should enhance startup access to public procurement by introducing an

accreditation method which would approve companies for Government procurement.

6a

44

Access to Finance 6b

Although, in general, access to finance is easier in Dublin than other startup locations,

and the Government extended tax incentives to support start-ups and SMEs in Budget

2013, there are some challenges:

in particular VC funding in the 5m - 10m range can be challenging to procure,

the Employment and Investment Incentive (EII) is somewhat restrictive, and

there is a lack of consistency in relation to the requirements of investment application forms with an increased time and cost required to complete forms

We should establish a group to examine in detail the suggestions received on

improving access to finance for startups, which are as follows:

Reform the Employment and Investment Incentive:

Remove the EII from the specified reliefs for the High Earners Restriction as relief is already restricted under the scheme

Increase the time period for investment under the EIIS to 5 years

Outline deeming conditions for eligibility in place of current trading criteria

Reduce administrative burden for entrepreneurs by introducing standardised forms (endorsed by the IVCA) for completion when seeking investment.

45

Tax Incentives 6c

Tax incentives offered by other locations target the startup sector, for example:

In the United Kingdom HMRC offers tax initiatives to encourage investment in business, including:

Incentives for non domiciled individuals to remit funds to the UK and invest in certain businesses

CGT relief for entrepreneurs on disposal of certain businesses Equivalent to EII is not included for High Earners Restriction

The French Auto-entrepreneur tax system charges small businesses a percentage of their actual turnover in social charges and French income tax

reducing administrative requirements

As suggested in 6b, a group should examine in detail the suggestions received, vis:

Incentives for venture capital firms to establish operations in Ireland (tax free gains, carried interest);

Enable non domiciled individuals who may become resident in Ireland to remit funds to invest in certain businesses without liability to tax;

Introduce a CGT relief for entrepreneurs who dispose of their business;

Enable startups to award share options to employees tax efficiently;

Improvements to the R&D tax credit regime to make it more attractive to small businesses, e.g. outsourcing limits, loss making companies cannot surrender credit to key employees;

Possible enhancements to the IP regime to remain competitive with other jurisdictions.

46

Administrative requirements for startup companies can be challenging:

Many struggle with accessing and providing information, with significant initial costs for startups in engaging lawyers and accountants.

There is often duplication of information required, for example in registering companies with CRO and Revenue.

Tax administration can be disproportionately burdensome for startups.

Suggestions received in our stakeholder consultations which should be investigated

include:

Provide a coordinated facility to better support administration needs of companies;

Merge and develop the www.businessregulation.ie / www.smallbusinessfinance.ie / www.basis.ie websites to create a one stop shop for new businesses;

Ensure businesses receive quick response to speed up set-up times;

Putting in place the right conditions for digital innovation in data protection & IP;

Consolidate the business and tax registration processes with a single unique business identifier that enables agencies to access all relevant data.

Administrative processes 6d

47

Most countries do not have access to the full range of technical and language skillsets that

startups require. Ireland is no different. Certain countries also actively encourage immigrant

entrepreneurs:

In the UK, an Entrepreneur Visa is available to establish new business or invest in existing business

It is not restricted to certain businesses

Initial investment of 50,000 per entrepreneurial team (up to 2 people) is required

In Canada, a Startup Visa Program enables immigrant entrepreneurs to launch innovative businesses by granting permanent residency

Entrepreneurs are linked with private sector organizations

Focus on innovative businesses that will eventually compete globally

Minimum investment: $200,000 from Canadian venture capital fund / $75,000 from Canadian angel investor group

Start-Up Chile seeks to attract early stage, high-potential entrepreneurs to begin their startups in Chile, as a platform to go global.

Provides startups with US$40,000 of equity-free seed capital, and a temporary 1-year visa to develop their projects for six months

Project must be globally-oriented and easy to scale.

Develop a new streamlined visa process for international startups

& investors

7

48

The proportion of immigrant founders in the Silicon Valley

has declined since 2005

which should raise questions

about the United States future ability to remain

economically competitive in

the international market. - Kauffman Foundation

Opportunity international startups need international people 7

Research clearly identifies a strong link between foreign born entrepreneurs and strong international startups

In the1980s to 1990s, Silicon Valley attracted more foreign-born scientists and engineers than any other US

technological center.

From 1995 to 2005, immigrants founded 52.4% of the startups in Silicon Valley

In 2000, 53% of science and engineering workforce in Silicon Valley was foreign-born.

Other US technology regions had less than a quarter foreign-born.

However, there has been an 8.5% drop in immigrant-founded companies in Silicon Valley (43.9% since 2005)

According to the authors, this signifies a potential reversal in previous trends of expansion of immigrant-led

entrepreneurship.

Source: Then and Now: Americas New Immigrant Entrepreneurs, Part VII by the Kauffman Foundation, http://www.kauffman.org//uploadedFiles/Then_and_now_americas_new_immigrant_entrepreneurs.pdf

49


& investors

In April 2012, Ireland introduced a Start-up Entrepreneur Programme which enables non-

EEA nationals to secure residency status in Ireland. This is extremely positive development

but up-take has been small to-date, we believe that it needs to be improved and promoted:

it requires capital of 75,000 per individual;

it needs to be championed by the community, particular the programmes alumni;

it is too narrowly geared to High Potential Start-Ups (HPSUs) startups.

There are also other reported difficulties with visa applications impacting with the startup

technology sector (although issues affect larger tech companies as well). Relative to other

countries these may not be as bad but in addressing the needs of business & entrepreneurs and their pace/expectation the below should be improved:

uncertain application process for non-EEA individuals,

timescales needed to secure startup entrepreneur visas (6 weeks 4 months),

timescale needed for applications by short term business visitors,

ad hoc arrangements may be possible for entrepreneurs attending accelerators but are not guaranteed,

difficulties obtaining work permits for employees, and

no pre-clearance facility for individuals visiting Ireland.

Of particular concern is that visa applications are not linked to sectors where there are skill

shortages.

7

50


& investors

7

As a matter of urgency, we will engage with the Department of Justice & Equality and the

Department of Jobs, Enterprise & Innovation through a workshop to balance the

expectations of the startup community with the challenges of immigration policy. As part of

that engagement, the issues to be addressed and with business & entrepreneurs leading

to a pilot or new approach include:

Develop a more international entrepreneur friendly system Enhance Entrepreneurs Visa to compete with initiatives in other countries

Lower the threshold amount. For example, lowering it to 40,000 for the first entrepreneur and 25,000 for each additional entrepreneur involved with a four person limit;

Support entrepreneurs who have successfully completed their accelerator/ incubation programme with follow on-time (e.g. 3 months) to secure next

round funding, provided they have funds to meet living costs.

Improve the visa application process for international investors & business people Introduce pre-clearance facility for entry into Ireland; Improve availability of work permits for employees of individuals who invest here; Review the skills-based visa schemes ability to attract individuals with skills which

are not readily available in Ireland;

Introduce a single application process for overseas entrepreneurs who require a visa.

51

Contents

Summary



Recommendations

Next Steps

52

Implementation timeline and plan

We see the startup Dublin workstream of Activating Dublin having three stages:

Initial report which sets out initiatives that address the issues we have identified and to help Dublin to do better as a startup city;

Business casing as some of the recommendations require additional analysis to identify issues around scoping (e.g. may require a pilot), resources and ongoing

funding models; and

Delivery of the recommendations.

Our main recommendation is for an overall unit or organisation to take the lead in

promoting Dublin as a startup city. This unit or organisation, or through a stakeholder

group, can oversee the delivery and co-ordination of the other recommendations. It may

not be possible to put in place the necessary structures in advance of progressing other

initiatives. In such case it may make sense to ask the original working group to oversee

that process until an overall unit is in place.

To the extent to which the Activating Dublin SteerCo accepts the reports recommendations we also recommend the establishment of a PMO structure to manage the delivery of our

recommendations, establishing workstream stakeholder groups (where necessary),

resourcing and managing of the delivery of the actions. The PMO structure could be

combined with other activating Dublin initiatives.

Overleaf is a suggested timeline for delivery of the recommendations.

53

Implementation timeline and plan

Promote a coherent

story for the city to

attract high quality

startups

Support

stakeholders to

build linkages and

create new high intl profile activities

Improve & clarify

current regulations

that support

startups in Ireland

Develop a new

streamlined visa

process for

international

startups & investors

Provide one-stop

portal to support

startups in search of

services

Identify & address

gaps in Dublins cluster linkages to

maximise network

effects

Other recommendations

2

3

4

Create a unit/organisation

whose aim is to help

Dublin become the most

dynamic place for tech

startups

Overarching recommendation

5

6

7

Conduct a pilot study to

separately promote

Dublin as a startup

City.

Develop business

cases to support 14

individual initiatives

Develop a business

case and funding

model and outsource

operation of portal

Outsource project

to

DCC Studio to

look at cluster

linkages

Engage with

D/JELR to get

agreement for

pilot of improved

visa procedures

Engage with

central/local

government and

agencies to action

initiatives

Action Resources

Timeline

Engage with DCC and

agencies on

establishing a Dublin

startup unit.

Address funding model

in discussions, believe

that any exec. Should

sit within DCC and

balance of resources

provided pro bono.

Activating Dublin to

fund pilot. Discuss

funding as part of

planning for expansion

of project


in individual business

cases.

Funding should be

provided through

central government

and self financing for

any new processes.

Resources provided by

DCC.


in business case,

believe it can be self

financing.

No incremental

resources envisaged.

Sep Oct Nov Dec I Jan Feb Mar Apr May Jun Jul Aug

Unit established and resourced by end June 2014.

Look to address sector data issues by Dec 2013.

14 business cases

delivered

Business case by end Dec/ Portal online

by June 2014

Initial scoping &

report

Representations

made

Engage with DJEI &

D/Justice and action

accepted into APJ

Initial pilot

1

Work on addressing

identified gaps

54

Working group

John Moran, Department of Finance (chair)

Edel Flynn/Ruth Flynn, The Digital Hub (theme leader)

Gary Leyden, NDRC Launch Pad (theme leader)

Joe Tynan/Edel Gunning, PwC (theme leader)

Paul Hayes, Games Ireland

Raomal Perara, ThousandSeeds and INSEAD

Declan Hughes, Forfas

Peter Finnegan, Dublin City Council

Paul OConnor, Department of Finance

Caitriona O'Kennedy / Emmet Oliver, IDA

Will Prendergast, Frontline VC

Lorcan OSullivan, Enterprise Ireland

Jamie Cudden, Activating Dublin / Dublin City Council

Patrick King, Activating Dublin / Dublin Chamber

Appendix 1

Consultation group included

Steve Collins, swrve (founder Havok) Paddy Cosgrave, Dublin Web Summit Eamon Leonard, EngineYard Paula Fitzsimons, author GEM Report Barry OLeary, IDA Des Fahey, Dublin Business Innovation Centre Conor Jones, McKinsey & Co Eoghan Murphy, TD Philip Maguire, Dublin City Council Barbara OBeirne/ Shane Gannon, McKinsey & Co Joan Mulvihill, IIA Cllr Naoise Muir , former Lord Mayor Eoin Costello, Hothouse David Varian, Guinness Enterprise Centre David OHalloran, Retail Unlimited Shane Scully, Bennett Construction Terry Neill, London Business School & UBM Tom Hayes/Naghmeh Reilly, Enterprise Ireland Liam Davis, brite:bill

Chan Shi, McGrath McGrane Solicitors Daniel Ramamoorthy, Treehouse Katherine Licken, Department of Communications Liam Kavanagh, The Irish Times Ronan Harris, Google Dick Gleeson, Dublin City Planner Cian McGinley, Eversheds John Menton, Arthur Cox Gina Quin / Aebhric McGibney, Dublin Chamber Deirdre Ni Raghallaigh, Dublin City Council John Murphy/Declan Doyle, PwC Kevin OSullivan, Silicon Canal Stephen Brennan, The Digital Hub Mark Whelan, Dubstarts Brendan McDonagh, IDA Sean Purcell, Dublin City Council Margaret Ledwith, Innovation Academy UCD Greg Swift, Dublin City Enterprise Board Dr Majella Giblin, TCD

55

Appendix 2 Example of Lean Business Canvas used in process

56

Appendix 3 Action Blocks from Digital Masterplan

Organising Action

Creating Awareness &

Building Participation

Citizen focus

Building the Digital

Commonage

Big Data Open Data

Infrastructure

Expanding & Innovating the

Economy

Companies w/ R&D potential

Startups

Shaping a Better City

Companies Communities

Individuals

Global Positioning

Investment Use Horizon 2020

funding

Knowledge as Power:

Developing People for the

Digital Age

57 Appendix 4 Enterprise Supports in Dublin Source: Presentation by Joanne Hession, QED on Dublin, the best city in the world to start a business (2013)

58

Appendix 5 Initiative Mapping in Innovation/Startup space (Jan 2013)

Documents

Best Place to Start Activating Dublin Tech Startup Report