Access to finance is the biggest challenge facing tech startups here, a survey of founders by Scale Ireland concludes.
Four in five respondents to the latest State of Start-ups survey said they believed it was difficult to attract capital in the current environment.
That was slightly higher than the percentage who reported the same issue in the previous year.
The rising interest rate environment has made it more difficult for scaling companies to source funding.
Lenders are generally less willing to finance start-ups when rates are increasing and it can be more challenging to access short-term funding to deal with increased expenses or business expansion.
248 tech start-up founders and CEOs participated in the latest Scale Ireland survey.
The aim of the exercise is to gauge sentiment among entrepreneurs in the sector on key issues including the economy, employment, taxation, state supports and incentives, skills, gender, and climate.
More than half of the CEOs and founders surveyed – 51.6% – considered funding to be their biggest challenge in the last year, up from 47% in 2021.
However, the uptake of state supports remains low with over 80% of respondents saying they had not availed of the KEEP share options scheme with two thirds saying they had not taken up the R&D tax credit.
“The survey clearly demonstrates yet again that many founders are finding state supports and incentives complicated, and difficult to navigate which needs to be addressed,” Martina Fitzgerald, CEO of Scale Ireland said.
“We are calling for the setting up of a taskforce to address this recurring issue, which is denying many companies of the opportunity to avail of supports that were put in place to help them,” she added.
Recruitment and retention of staff was cited as the biggest issue by 17% of participants (25% in 2021).
The cost of doing business was identified as the biggest challenge by 12% in 2022, compared to 8.7% in 2021.
Other issues included tax and regulation burdens and lack of expert advice and support.
The publication of the latest State of Start-ups Survey comes ahead of Scale Ireland’s second Regional Start-up Summit tomorrow.
“There are currently more than 2,200 indigenous tech start-up and scale-up companies, employing more than 55,000 people in Ireland,” Chair of Scale Ireland, Brian Caulfield pointed out.
“For each additional job created by a start-up, five additional jobs are created in the wider economy. There are 188 start-ups in Cork, 151 in Galway and 87 Limerick, with clusters of start-up and scale-up companies in counties Clare, Kerry, Kildare, Louth and Waterford,” he said.