As part of our series on foreign direct investment (FDI), Globig recently spoke with three FDI experts from IDA Ireland. IDA Ireland is the government agency responsible for promoting and getting foreign investment in Ireland. Will Corcoran, Alan McGlinchey, and Deirdre Moran shed some light on the exciting opportunities available to fast-growing startups and SMBs expanding into Ireland. This article will provide a Q&A summary of our conversation and important resources.
Links to previous FDI articles are below:
Foreign Direct Investment For Fast-Growing Startups and SMBs
How To Implement Foreign Direct Investment Strategies Into Your International Expansion Plans
How does Ireland see and approach FDI?
Ireland has a very positive and proactive approach to FDI because of its smaller size and economy. Ireland is always happy to welcome and be supportive of new, foreign business. The Irish see foreign business favorably. IDA is responsible for promoting FDI in Ireland. In fact, IDA was the first FDI agency of its kind and many other agencies model theirs after IDA.
What makes Ireland attractive to foreign businesses?
Ireland consistently ranks among the best places in the world to do business. Ireland has a talent workforce, great business infrastructure (including a highly developed technology infrastructure), and a low corporate tax rate. After Brexit, Ireland will be the only common law legal system and English speaking country in the European Union. Companies that have expanded into Ireland stay long-term and continue to expand in Ireland.
What kind of companies is Ireland focused on attracting? Size, stage (startup, multinational corporations (MNs)), industry? Do any types of companies have an advantage or priority over others?
IDA helps companies of all sizes and across many different industries. Ireland has been attracting large MNs for years now. Recently, IDA has focused on smaller, high growth companies as well. In fact, IDA created a team that focuses solely on high growth companies.
Ireland’s FDI policy is aimed at attracting companies that will create employment opportunities in Ireland and will better the Irish and European Union community and economy. To that end, IDA helps companies of all sizes and across many different industries. Ireland has been attracting large, MNs for years now. Recently, IDA has focused on smaller, high growth companies as well. In fact, IDA created a team that focuses solely on high growth companies.
Ireland has FDI incentives that appeal to and are appropriate for all types and sizes of companies. The commonality between the companies we help is that they all have an international plan or goal. In general the companies are not startups in the earliest stages of their company, rather they usually have revenue, market traction in the US, customers, potential customers in the EU, and some funding before they look at international markets.
What type of incentives does Ireland offer? What criteria are decisions based on? Does that criteria differ depending on the the type of incentive a company seeks, e.g., connections, funding?
Ireland offers companies many of the traditional FDI incentives, as well as benefits and assistance to smaller companies. Keep in mind, rules around grants and incentives are EU rules, rather than country-specific rules. This limits how creative and favorable the FDI incentives can be. All incentives are offered to companies on a case-by-case basis. We will work with companies to evaluate FDI incentives, which can include many incentives for one company. Keep in mind, it is rare that a company chooses a location solely based on an incentive. Incentives are just assistance for those companies that are just coming into the particular location.
Financial incentives: Common financial incentives include Employment grants, R&D grants, training grants. All financial incentives are offered and negotiated on a case-by-case. As mentioned earlier, these are governed by the EU. For example, employment grants are set up to pay a certain percentage of salary costs for the first two years of operations (usually between 5%-10%). EU limits these grants and has different rules for MNs, SMBs, and startups. Generally, the percentage is lower for larger companies, so we can often give smaller companies more.
Practical advice: IDA offers business assistance to companies coming into Ireland. Because we offer our services free, this can significantly help smaller companies. We help companies with incorporation, hiring, branding, and generally reducing the risk for scaling companies with a goal of generating revenue in Europe.
Country incentive: We consider Ireland to be an incentive in and of itself. As mentioned, the ease of doing business in Ireland consistently ranks within the top 3 in the world, Ireland boasts a talent (well-educated with low or no loans) workforce, Ireland is a prime location, offering great access to Europe, Ireland offers companies a competitive 12.5% business tax rate.
How do people and companies get in touch with IDA? How does IDA help companies? What services are offered?
Companies can connect with IDA by phone, through our website, and on LinkedIn. IDA also spend a lot of time approaching and reaching out to companies. We spend a lot of time networking; at conferences, events (with existing investors to speak about their experiences) and in places where companies or individuals who expand internationally will be.
When we first speak with a company, we try to understand what their drivers are. We aim to determine where they are in the expansion process and what they need help with. We encourage companies to visit so we can work face-to-face. We help companies with many aspects of international expansion, including hiring, real estate (for purchase or lease) assistance, introduce them to peer companies and service providers that might be of interest, we also help with visas and work permits. For companies that are interested, we also discuss the more traditional FDI incentives.
IDA prefers to work directly with the company. Even if an FDI consultant is on the expansion team, we still want to work with the company. IDA isn’t competing with anyone because it’s a free, concierge service of the Irish government. IDA is currently working with over 1300 companies on an ongoing basis. IDA aims to keep the relationship going and is happy to help out after a company has entered Ireland.
Foreign direct investment is not just something for larger companies to consider anymore. Increasingly, governments are interested in attracting smaller companies. Ireland is no different. Ireland, through IDA, works with companies of all sizes to help them come into Ireland. IDA’s services are free and personalized.
Resources:
Related Articles and Content You Might Like:
Foreign Direct Investment For Fast-Growing Startups and SMBs
How To Implement Foreign Direct Investment Strategies Into Your International Expansion Plans
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