Ireland Stirs Homegrown Flavor Into Tech Scene
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Version 0 of 1. DUBLIN — The Grand Canal Docks, an upscale business district here in the center of town, is a kind of home away from home for the big Silicon Valley companies like Google and Facebook. These international behemoths, in large part attracted by the low Irish corporate tax rates, have big presences here. And with their thousands of workers and bustling offices, they have long overshadowed the local start-up scene. But Ireland last month became the first debt-ridden European country to exit an international rescue package, and now, through a combination of both longstanding and new grants and tax breaks, government officials are pushing to invigorate smaller, homegrown Irish companies. The hope is that a more robust tech sector can cement the country’s economic recovery. It won’t be easy. Ireland’s start-up scene is still relatively small compared with other European hubs like London and Stockholm. In the first nine months of 2013, the latest figures available, the country’s fledgling companies received around a combined $65 million of venture capital investment, a 28 percent drop compared with the same period a year earlier. The figure also is less than a tenth of what rivals in Britain secured in the first three quarters of 2013, according to the data provider DJX VentureSource. And in the race to attract top engineering talent, the lifeblood of a start-up, it is hard to compete with the likes of Google and other global companies, which can offer tantalizing salaries and perks, as well as prestige. Still, there are signs of hope. The domestic tech industry generates around 70 billion euros, or 40 percent, of Ireland’s annual exports and employs more than 100,000 people, according to government statistics. This activity can be seen in the Grand Canal Docks, where young multilingual programmers and developers swap office gossip over expensive coffees in fashionable riverside bistros, while construction workers scramble to build high-rise office blocks to house international and local companies that have flocked to the area. “This place has an interesting combination of young people and inventive scrappiness,” said Stefan Weitz, a senior director of search at Microsoft who has regularly visited the company’s operations in Ireland over the last 15 years. For many of Ireland’s fledging companies, the key is to look for growth beyond their home market, which has a population smaller than that of Massachusetts. To succeed, many rely on government grants and tax breaks, like a 25 percent tax credit on research and development conducted in the country. The support is available to big and small tech companies alike. The tactic, which also has been successfully used by Israel to help its domestic tech industry, allows companies to hire more engineers and developers as they can write off some of the cost against their corporate taxes. To maximize the benefits, many Irish tech companies retain their development centers in the country, but move senior managers overseas, often to the United States, to be closer to their clients and investors. For example, Movidius, an Irish semiconductor firm that has raised almost $50 million in venture funds, has a 12-person team in Dublin although its chief executive is in California. Datahug, an online business networking start-up, also has a sales office in New York, though it expects to keep its engineers and developers in Ireland. “It’s cheaper here, but we need to be close to our customers,” said Ray Smith, 33, a co-founder of Datahug, who spends half of his time in the United States. “To succeed, you have to be in America.” One aspect of Silicon Valley culture can certainly be found here: the struggle to hire and retain top talent. Local entrepreneurs often complain that it remains difficult to hire well-qualified Irish engineers and developers, despite the country’s youth unemployment rate of almost 30 percent. “There’s not enough local talent,” said Petter Made, a Swedish co-founder of the payments start-up SumUp, who oversees a 35-person team in Dublin that includes few Irish developers. Local start-up founders also say that international companies like Facebook and Google attract the highest-achieving Irish computer science graduates through high salaries and corporate perks like well-equipped gyms and fully stocked kitchens. Few foreign developers who relocate to Dublin to work for large companies choose to stay to start their own businesses here, preferring to return to their home countries. “People at the big firms often don’t have local ties,” said Sean Blanchfield, 35, an Irish serial entrepreneur. He sold his software start-up to the gaming giant Activision Blizzard in 2007, and now runs a new advertising technology business alongside an outreach program at Trinity College Dublin to persuade Irish students to start their own companies. To improve connections between start-ups and global companies, some of the tech giants have started to reach out. “Historically, there wasn’t much contact between the big companies and the local technology scene here,” said Will Prendergast, a partner at the local venture capital firm Frontline Ventures. “Now, that’s starting to change.” Google, which employs roughly 2,500 people in Dublin, has created workshops for local start-ups on topics like how to improve search results. The goal is to help Irish tech companies to promote their businesses online — as well as coax the start-ups to use Google’s own offerings. It also now offers mentoring programs that connect Google employees with local fledging companies, and has teamed up with a Dublin university to provide computer science training to around a thousand high school teachers. “It gives Googlers an outlet for innovation,” said Paddy Flynn, a company executive who now oversees the outreach programs here. “We need to be part of the community.” The government also is trying to woo international entrepreneurs to start local companies here though its program of grants and tax breaks. When Brett Meyers, an Australian, arrived 13 years ago, he did not expect to stay for more than a year. Yet after getting frustrated by high bank charges levied to send money back home, Mr. Meyers, a former programmer at JPMorgan Chase, co-founded CurrencyFair, a low-cost foreign currency start-up, with a grant of €15,000, or $21,000, from the Irish government. Over the last five years, the online service, which uses peer-to-peer technology to match individuals who want to exchange currencies, has processed around €600 million, or $826 million, of transactions, mostly between Britain, Europe and Australia. Mr. Meyers said the start-up had saved customers a combined €25 million in banking charges. The firm plans to expand into the United States next year. Ireland’s prime minister, Enda Kenny, stopped by in early December to open its new Dublin headquarters. “I had a one-year plan to stay in Ireland, but I never left,” Mr. Meyers said. “You have to be impressed by how the Irish have dealt with the crisis. Whatever has happened, they have just got on with their business.” |