Creating an IPO Culture

August 23, 2010

To my mind, Ireland has not had the level of success that it should have had for the capital; financial, educational and rhetorical, that Ireland Inc. has expended on high-potential start-up enterprises (HPSU), technology transfer and the commercialisation of knowledge-based products and services. The great hope for the future is the ‘knowledge economy’ which would require Irish entrepreneurs setting up successful knowledge-based enterprises. So what should ‘success’ look like?

The first point is to analyse the ‘objective’ being aimed for. Too many times those involved in enterprise support focus on the number of start-up ventures that go through incubation centres, enterprise centres, third-level enterprise platform programmes and clearly this is an important measure. However, it appears to me that we may be setting the bar too low. Surely the ultimate ‘objective’ is not to have HPSU but for a significant proportion of these to become successful, floated ‘IPO’s or early-stage companies sold to the bigger players under trade sales. The number of Irish-initiated IPO is very small and this should indicate that something needs to be tweaked or improved.

In the first instance, I think that this will require a change of mindset, by all involved. We need to create an ‘IPO culture’ not a ‘HPSU culture’. Partly, this is a problem relating to our entrepreneurs (I’m really setting out to make myself very popular!). It appears to me that our entrepreneurs lack the necessary ambition to drive their ventures beyond a certain point (usually 15 employees and a large comfort zone for the owners, management and staff). Of course I will have the response of look at Iona Technologies and other cases but as a percentage of those that establish HPSU they form a minute percentage and a proportion far lower than that of our relevant competitors. Let me give an example. Last year, frustrated by the subject of lack of ambition I asked the Irish Stock Exchange to do an information workshop, in the Board room of the Stock Market, for interested entrepreneurs who might be interested in knowing what steps they should take now to set themselves up if they wished to consider an IPO in several years time. I used an extensive network to advertise the event. Now, if this session was offered for free in any large American, Scandinavian, Japanese or Chinese city, the attendance would be strong. How many showed up in Dublin: 9 and some of those were consultants. Our entrepreneurs did not want to know how to go about an IPO.

This is a mindset issue. We need to raise the bar, be more ambitious and if necessary, bring in people form outside Ireland with great ideas and the ambition to set a new standard. The objective needs to be ‘IPO’ from the start. I accept that there are other factors that are required to be addressed if this IPO culture is to succeed, in particular the lack of venture capital in Ireland and a more ‘aggressive’ approach (in business philosophy rather than physical) towards our entrepreneurs in our third-level entrepreneurship policies but does this really look like success?

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