Irish start-ups grapple with dual impact of the coronavirus and Brexit


A man looks into a shop selling face masks in Dublin city centre. The government’s failure to properly communicate its Covid-19 public health message has been described as an “abuse of power”.

Niall Carson/PA Images via Getty Images

DUBLIN — Brexit is back on the agenda for Ireland’s small businesses and start-ups, despite the continued threat of the coronavirus pandemic.

Research published on Tuesday from the Economic and Social Research Institute (ESRI), showed that small and medium-sized enterprises (SMEs) lost between 6 billion euros ($7.1 billion) and 10 billion euros from March to June with many companies using up their cash reserves.

Meanwhile, Ireland officially entered recession last week after the economy contracted a record 6.1% between April and June.

Julie Sinnamon, the chief executive of Enterprise Ireland, the agency responsible for developing the country’s indigenous businesses and a regular early stage backer of tech start-ups, spoke to CNBC on the impact of Covid-19.

“The immediate impact on companies was liquidity, so a lack of funding,” she said.

Enterprise Ireland established a number of funds and mechanisms to provide emergency capital to companies. It has approved 34.4 million euros of funding for Irish companies affected by the coronavirus so far. Much of that has been through the Sustaining Enterprise Fund, which provides liquidity of up to 800,000 euros, with up to 200,000 euros of that being non-repayable. 

It hasn’t been without challenges. Some companies have complained of a slow process in getting applications submitted and approved during what are emergency times. In June, just five companies had been approved for the Sustaining Enterprise Fund. As of Sep. 11, there have been 53 companies approved. Enterprise Ireland said it aims to complete applications in 20 days.

“I think between now and the end of the year we will succeed in supporting and using the funding available,” Sinnamon told CNBC. “But this slow start in terms of companies applying is not any different than we would have expected, or would have seen in previous crises when you had similar supports available for companies.”

Sinnamon said Enterprise Ireland’s attention is now shifting to longer-term efforts. Covid-19 has seen the agency balancing the needs of companies facing an immediate risk of collapse and those that have been forced to pivot into new areas.

“For some of them it has required investing in innovation, changing their products. In some cases, it was really just retracting into their shell in the short term, but in others it was diversification,” she said.

Brexit

At the start of 2020, Enterprise Ireland’s priorities were very different. Since 2016 the company’s top line messaging has been around Brexit preparedness, developing support funds and grants for those most exposed.

“We are really trying to reactivate the (Brexit) plans for companies who had parked them in the height of the Covid crisis to make sure that they’re continuing with their plans,” Sinnamon said.

It has been urging Irish companies to reduce their dependence on the U.K. for exports and to diversify into other markets. The U.K.’s Brexit transition period with the EU is set to end on Dec. 31 and there’s still a real chance that both sides will fail to agree a trade deal before that date.

Sinnamon said that around 15 years ago, 45% of Irish exports went to the U.K. Enterprise Ireland set a target to lower that to 33% by 2020 and it is now at 31%, she said. 

In 2019, according to figures provided by the agency, exports to the euro zone grew by 15% and North America by 16%. 

“We’re growing exports to the rest of the world at a faster rate and hence our overall dependence on the U.K. market is now down. It’s only 31% of our exports and declining,” she said. 

In February, Sinnamon announced her intention to step down from her role as chief executive of Enterprise Ireland, coinciding with the winddown of the agency’s current five-year strategy. Those plans were put “on ice” due to the Covid-19 pandemic, but she said it is still her intention to step down this year.



Source link

Discover

Sponsor

Latest

2020 Porsche Cayenne Coupe vs. 2021 Mercedes-AMG GLE 63S

For decades, Porsche has established the benchmark in many (if not all) vehicle classes that it competes in. From the 911 to the...

GMC Hummer infotainment uses Unreal Engine, also used in video games

We're only a couple weeks away from the reveal of the GMC Hummer EV truck and SUV. And we're expecting a lot of...

Voters worry Trump tying Covid vaccine to 2020 election, polls say

Dr. Matilde "Mattie" Castiel receives an injection from RN Bethany Trainor at the University of Massachusetts Medical School in Worcester, MA on September...

Tesla deliveries to rise 30% to 40% in 2020

Tesla CEO Elon Musk speaks outdoors at the company's 2020 "drive-in" shareholder's meeting and battery day on Sept. 22.Tesla CEO Elon Musk said,...

Valentino Rossi quashes retirement talk

Seven-time MotoGP champion Valentino Rossi has dismissed speculation he will be retiring from the sport at the end of the season, saying he...