12 thoughts on “Where Have The Angels Gone?

  1. Punches Pilot

    Would it not be fair to say that a lot of this start up money is being spent very loosely on pie in the sky stuff. Maybe that bubble is about to burst and our recent memories of all things financially stupid are a little too raw to be investing in Cornflake bar chains and the like

    1. Al

      No It wouldnt, it would be the tax treatment of the UK schemes, hold the shares in the UK for 3 years and the gains are CGT exempt, hold the shares in Ireland for 3 years and the gains are taxed at 33%

      1. Punches Pilot

        So its for reasons of tax avoidance by companies that might have no intrinsic value what so ever.

        1. Al

          No, because UK investors will say why pay tax in Ireland when I dont have to pay any here. Would you pay UK for the sake of it?

    2. Eamon Leonard

      @Punches Pilot – it’s a fair question, I have some thoughts on it, if you’re interested, in no particular order:

      – By definition, (tech) startups are “pie-in-the-sky”. They feel there’s a gap in the market for a problem that they have a potential solution for, but don’t have any data or proof to back that up. Most of the energy and spend in early stage startups is about proving that a product should exist, that there is in fact a need, and that some segment of users would be willing to pay for it.

      – Investing in early stage startups is one of the riskiest things an individual can do with their money, but the potential for many times a return is high, if you back the right horse.

      – Speaking of backing horses, it’s pretty much the same thing with startup investment. Those that make the big money on betting on horses know a lot about the horses, jockies and trainers: the lineage, the stats around the horse, the conditions they perform well under, the jockey, their current form, the trainer and their reputation etc etc. And they probably know this for a lot of the horses / jockies / trainers in a given race. Therefore, while the bet is still a risk, there is some level of calculation behind it. Everyone else just has a flutter, and rely on a lot of luck. Therefore, the kind of people who should be investing in early tech startups, are people that understand the level of risk involved and are prepared to take a hit, for a slim chance of a potential big outcome (or even just getting their money back)

      – Likewise, those who tend to be more successful at early stage / angel startup investments are those that have been around long enough to acquire knowledge on things like how tech products are built, marketed and sold. They know about the founders and promoters involved, know enough of their backgrounds to get to a level of risk they’re comfortable with. And ideally, the investors themselves have also brought a product to market before and understand the process, having empathy for the challenges faced by founders.

      – In Ireland, there just isn’t that many people who can a) invest to the level that startups need from angels, and b) bring access to knowledge, experience or other useful things and c) do this on enough of a repeat basis that they are effectively spreading their risk…. Yet.

      – You mentioned a bubble bursting, not sure if you mean an economic bubble or just “bursting someones bubble”. If it’s the former, well… I don’t think we are talking near the level of scale for there to be an economic bubble for early stage angel funding. Certainly nothing like what we saw with property. However, if it’s the latter, then yes, its inevitable that as a founder your bubble will be burst sooner or later, that’s just the nature of the beast.

      – Finally, it’s worth bearing in mind that angel investors aren’t the only ones taking on risk. Many people who found a startup do so because they believe in a problem that needs to be solved. They believe in it so much that they quit their jobs and take on a lot of personal risk, sometimes investing their savings or putting their professional reputation on the line. Not to mention the trust placed in them by family members and partners / husbands / wives. There can be a lot put on the line in some cases, way beyond the financial side of things. But that’s their right, they can do it if they want to and if they can — it’s their own life and career after all. And even if they don’t succeed in a way they want, they still have gained some experience, and can probably (hopefully) find work elsewhere.

      – That being said, there are probably also people out there who found a startup because they just like the idea of founding a startup… “Wantrepreneurs”, if you will :) Because there’s a lot of media coverage and a level of hype around it. The fact is, this shit is hard. And those people get their wake up call, or burst bubble sooner or later.

      Eh, yeah, bit of a ramble there, but hopefully sheds a bit of light on things for you.

  2. cluster

    For all the govt talk of high-tech, start-ups, innovation, etc. there is no real thought put into how to facilitate this.

    The govt has been slow to digitise/innovate within its own departments, the state has been clunky in how it views and treats new business models (unilateral decision of the Revenue on Air BnB being a perfect example – it seemed to catch everybody unawares)

    It seems that our ‘industrial policy’ is based entirely on attracting large companies in with promises of a flexible workforce & relatively low tax. This has been relatively successful to date but is in dire need of a real re-think/re-develop.

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