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Speech by the Taoiseach, Mr. Brian Cowen T.D. at the announcement of the Second NPRF investment under Innovation Fund Ireland Royal College of Physicians, Wednesday 15 December, 2010 at 3.00pm


I am delighted to be here today to mark the second investment under Innovation Fund Ireland.

In particular, I would like to welcome Mike Hirshland, Terry McGuire and their colleagues from Polaris Venture Partners to Ireland.

I am delighted that you are locating your new Dogpatch Labs Europe facility in Dublin.

This is an exciting initiative for Ireland, and important to our ambitions for this country.

I would like to welcome Paul Carty and his colleagues from the National Pensions Reserve Fund.

I would like to thank the NPRF for the very proactive approach you are taking to Innovation Fund Ireland.

It is very encouraging that you have already made two commercial investments on the basis of your own rigorous investment criteria.

I know that you are committed to further development of Innovation Fund Ireland and look forward to further investments in the period ahead.

Frank Ryan and his team in Enterprise Ireland have also made great progress to get the Fund up-and-running.

I am delighted that their work has paid off - and that they have received 32 expressions of interest in the Fund in response to their first call for proposals.

I know that the evaluation of these applications is underway and I look forward to hearing the outcome of this process in the New Year.

Finally, I would like to welcome Damian Callaghan, Chair of the Fund's Advisory Board, Members of the Board and Members of the Innovation Taskforce and its implementation committee.

Ireland's strengths
Ladies and Gentlemen,

Nearly two years ago I launched the Government's Framework for Economic Renewal - 'Building Ireland's Smart Economy'.

One of the core elements of that Plan was the goal of transforming Ireland into a Global Innovation Hub.

We have set that simple, but ambitious goal.

We want to make Ireland:
- the best place in Europe to turn research and knowledge into products and services;
- the best place in Europe to start and grow an innovative company;
- the best place to relocate or expand and scale an SME; and,
- the best place in Europe for innovative multinationals to collaborate with each other and with clusters of small companies.

This is achievable.

Despite recent macroeconomic difficulties, Ireland remains a great place to do business.

- We have a young, well-educated, English-speaking workforce;
- Our competitiveness has improved rapidly over the past two years;
- Ireland is ranked fourth in the world in terms of the availability of skilled labour and openness to new ideas;
- Ireland's has a high rate of entrepreneurship and an international mindset;
- And we already have clusters of the world's leading multinational companies in Ireland: almost 1,000 companies - including household names such as IBM, Google, eBay and Facebook.

Ireland also has a strong record in successful businesses. Just to take four examples:

Danone has expanded its plant in Macroom, Co Cork. Currently 1 in 7 babies worldwide are fed on Irish-produced Infant Milk Formula; this will rise to 1 in 5 after the new investment is on stream.

75% of treatments worldwide, where a balloon or stent is used in a heart-related procedure, will use a product produced by Irish company Creganna, based in Galway.

Mincon are a global leader in rock digging technology. Their facility in Limerick is where they developed the drills that were used in the rescue of Chilean Miners.

When entering the USA, Japan, Ireland and Australia, among other locations, the software used to read your fingerprint and your eyes - known as biometric security software - has been developed by Irish software company Daon.

These are just four examples and there are many others.

Innovation Taskforce progress
We need to have confidence in ourselves and what we can achieve.

In March, I published the Report of the Innovation Taskforce, which sets out practical steps to make Ireland a Global Innovation Hub.

Minister O'Keeffe is chairing the Implementation Group, which I understand met again this morning.

And I know that we have made really good progress since March. Just to give a few examples of progress:

all our universities have now agreed to introduce bonus points for maths starting with the Leaving Certificate in 2012;
the IDA has developed a new Programme to attract fast-growing companies to locate their European Headquarters in Ireland;
Enterprise Ireland has introduced enhanced seed and angel funding arrangements for innovative start-ups;
an expert group will shortly finalise reforms of our Intellectual Property system, including development of a national protocol for ownership and access to State-supported IP;
Enterprise Ireland is launching a campaign to attract overseas entrepreneurs to locate in Ireland;
improved visa arrangements are being introduced by the Department of Justice;
an exercise is underway, chaired by Jim O'Hara from Intel, to ensure that research funding is more targeted on strategic areas of national importance; and
a pilot Flagship initiative in the Silvertech area is included in the National Recovery Plan.

In addition, despite severe budget pressures we have ensured Ireland retains an attractive tax regime for enterprise. Particularly important is retention of the 12.5% rate of corporation tax. We have an attractive carried interest tax provision, corporation tax exemptions for start-up companies, and are committed to introducing an Employment and Investment Incentive.

Our Higher Education Institutions too have stepped up to the plate. They have formed a range of Strategic Alliances to pool resources and expertise and drive innovation.

The Importance of Entrepreneurship
We are re-focusing and re-invigorating all parts of the "innovation ecosystem" with the following principles:

1. The entrepreneur and enterprise must be at the centre of our efforts as we stimulate recovery;
2. Establishing, attracting, growing and transforming enterprises must be the focus of a coherent national effort;
3. An education system which fosters independent thinking, creativity and innovation is vital in a smart economy;
4. We must sharpen the focus of our national research system to target areas of potential strategic and economic advantage for Ireland;
5. The State should actively accelerate success by encouraging flagship projects around which established and new companies can innovate;

and last - but certainly not least -

6. Availability of smart capital is crucial for starting, growing and transforming enterprises.

The Importance of Venture Capital
The empirical evidence shows that Venture Capital stimulates innovative activities in firms. Start-ups financed by a venture capitalist need less time to bring a product to the market, are more likely to patent, and those firms achieve significantly higher growth rates. VC funds are nearly three times more effective in stimulating industrial innovations.

VC is important for the generation of employment in all sectors.

And VC intervention is more than just a cheque book. VCs are crucial in a huge range of activities that are important for the development of SMEs including management advice, strategy formulation, supply networks, communication skills, and financial advice.

The evidence shows an increase in the local supply of VC positively affects the number of firm starts, employment, and aggregate income. And this, in turn, drives employment creation.

Moreover, VC stimulates the creation of more firms and more jobs than are directly funded from the VC activity itself. International studies suggest that VC investment in an additional firm would stimulate the entry of an additional 2 to 12 firms.

And the VC industry has a particularly important role in creating new industries, for example, in clean technology and social media.

Overall, venture capital is a significant and important factor shaping economic output and productivity.

It has been shown to contribute to economic growth - directly through innovation - and indirectly by improving the absorptive capacity of the economy. That is to say, the know-how and skills developed in VC-backed firms spill over into the rest of the economy such that existing knowledge is used to improve production systems right across the economy.


Innovation Fund Ireland
Thus, the accumulation of VC is a significant factor contributing to productivity growth, economic growth and employment.

In Ireland we have made major progress in terms of the provision of smart capital. But we are now thinking bigger. The Government sees the Irish opportunity as being a European opportunity. Europe is relatively immature when it comes to growing and scaling companies. We believe there is a demand for an attractive environment for entrepreneurship within Europe supported by smart capital.

That is why we have launched Innovation Fund Ireland.

The objective of the Fund is not just to increase the availability of venture capital, but also to transform the Irish market by attracting top tier Fund managers.

In October, the NPRF announced its first investments under Innovation Fund Ireland.

DFJ Esprit have now opened an international office in Dublin, with a Dublin based partner. In addition, DFJ - which is based in Silicon Valley - will work with the IDA to help bring fast-growing venture backed companies to Ireland.

Today, I am delighted to welcome a further exciting development.

The National Pensions Reserve Fund (NPRF) is investing 50 million dollars in Polaris Fund VI.

I'm sure you are all aware of the credentials of Polaris as a leading international venture capital firm with a very impressive investment track record.

Today Mike and Terry are announcing the establishment of the European Dogpatch Labs business accelerator facility in Dublin - one of only four worldwide and the first outside the United States.

The Dublin lab will be open plan space housing over 30 teams working on new businesses at varying but early stages of development.

Attracting this facility is a significant coup for Ireland. I believe it will help us bring people from across Europe, and beyond, to start their companies in Dublin.

I can assure Polaris of the full support from the Government and the State Agencies in making a real success of this project.

Future commitments
The Four Year National Recovery Plan and last week's Budget shows that we will continue to prioritise this Agenda.

Despite the budgetary pressure, we will invest €570 million in science, technology and innovation next year.

With these funds:
- Science Foundation Ireland will maintain 29 top-class research centres in 2011, and continue to work with over 400 industry partners;
- Enterprise Ireland will help approximately 1,200 companies with research and innovation activities in 2011;
- Enterprise Ireland will also support 85 High Potential Start-Up companies next year, rising to 100 by 2015;
- the number of industry-led competency centres will be doubled to 16 by 2015; and,
- IDA will continue to attract new investments, nearly half of which were R&D related this year.

This meets a core recommendation of the Taskforce: to sustain investment in research, innovation and enterprise. This will help generate the skilled people, and new ideas, to provide a flow of start-up and fast-growing companies.

Copyright Reform
Of course, this is very much an opportunity for Europe - with this area being spearheaded by Commissioner Geoghegan Quinn.

I believe that the new Digital Media world is a sector where the European Union should try to carve out a lead for itself.

In doing so, I think we need to look again at how the Union deals with issues such as intellectual property and particularly the use of copyright material.

The Digital Media sector requires copyright laws that are flexible and suitable for the modern internet environment. I do not believe that the current European copyright legislation is the best way of dealing with the new on-line world, with its myriad of opportunities.

As Commission Vice-President Neelie Kroes said recently that 'we must ensure that copyright serves as a building block and not a stumbling block'.

I think it is time to review our copyright legislation, and examine the balance between the rights holder and the consumer, to ensure that our innovative companies operating in the digital environment are not disadvantaged against competitors.

As well as encouraging such a review at European level, the Minister for Enterprise, Trade and Innovation will also be reviewing our domestic application of copyright legislation to identify any changes we should make within the existing EU framework.

To conclude - the message I want to deliver today is that we are on track in developing Ireland further as a Global Innovation Hub.

Innovation Fund Ireland is a central tool in achieving this. I hope that we will build on the announcements made to date with more in the New Year.

Last month the Dublin Web Summit and the Founders Event were held in Dublin. It raised our profile as a location of choice for top technology businesses. It attracted huge interest from around the world.

The decision of Polaris to establish here will help us build that momentum.

All the State Agencies will be working together to ensure we get this positive message out and keep attracting high quality investment and stimulating job creation.

I believe in future years we will look back on Innovation Fund Ireland and other initiatives in this area, with great pride, as significant contributors to economic recovery and growth.