Sectors & markets
Station F… off? Will plans for a national tech incubator work in Ireland?
News of a new hub modelled on a hugely successful French incubator are causing excitement
News that the government is considering establishing a national incubator to help early-stage companies to grow has been well received.
There are many in the tech sector hoping that such a development could help bring about the next Stripe.
But is it really the best way to encourage Irish businesses to scale new heights?
The plan, if realised, is certainly ambitious.
Enterprise Ireland told the Business Post on Wednesday that consultations with key players in the Irish start-up and entrepreneurship ecosystem are aimed at “positioning Ireland as one of the leading countries in the world to start and scale global business.”
Industry sources said the talks are of an exploratory nature only at this stage.
But it is believed that if approved, the hub could be similar in nature to Station F, the hugely successful French tech incubator that is widely regarded as a blueprint for other countries to follow in helping indigenous start-ups to scale.
Station F has become the centrepiece of Emmanuel Macron’s ‘innovation economy,’ which has seen France take the lead in supporting indigenous start-ups in Europe.
So could copying this model prove successful for Ireland?
Start-up zoo
Not according to some analysts who question whether it is the best approach to fostering innovation.
“While it's great to see the appetite that government has for innovation and start-ups, there are some far more practical steps they could take to support that growth than building a start-up zoo,” is how Eamonn Carey put it.
Having been an active member of tech communities in Europe, UK, Middle East and Asia, Carey knows what he is talking about.
A general partner at Teva Ventures, a self-proclaimed “recovering founder,” and the former managing director of Techstars London, he has seen countless examples of attempts to ape Station F’s success.
Lithuania, is the latest example. In seeking to establish itself as a leading tech hub, the country recently announced plans to establish a €100 million incubator that at 55,000 square metres would be nearly two-thirds bigger than Station F.
“Everyone name checks Station F, but really, it's a privately funded vehicle, and that's why it works. There's a temptation that I've seen in every government and quango I've ever spoken to believe an almost 'Field of Dreams' vision of tech entrepreneurship - if you build it, they will come. The reality is lots of these campus ideas turn into white elephants which are great for innovation theatre and headline grabbing and very little else,” Carey said.
Located in a former railway depot in Paris, Station F is the brainchild of Xavier Niel, the owner of Eir.
Established in 2017, it is the world’s largest start-up campus with 1,000 companies based there. In addition to desk space, the incubator provides over 30 programmes, mentorship and other services, to help early-stage companies to scale.
Among the challenges Carey outlines is where a national incubator might be located.
“How many political bunfights and point scoring exercises will we need to go through in order to get to the only logical answer ,which is Dublin?,” Carey asked.
In addition, there are questions around who would run it, how much funding it could need, what programmes it might operate, and what happens to all the organisations already supporting start-ups?
Given Ireland is generally poor at managing big projects, whether a tech incubator would ever see the light of day is debatable. In addition, just creating it is by no means enough if other issues affecting scaling companies aren’t also properly addressed.
“The reality is that these things spring up organically. What's happening in Lithuania is a consequence of increased angel investment activity and a push from government there to have pension funds invest in VC funds, which in turn invests into the ecosystem,” Carey said.
“The Shoreditch neighbourhood in London is sometimes claimed as a government creation, but really, it was groups of founders and investors who created their own gravity,” Carey said, highlighting that special investment schemes had added thousand of new angel investors to the UK ecosystem.
Innovation theatre
Drew O’Sullivan, a start-up advisor, is equally as wary of just how useful a tech incubator could be for Ireland, believing that while it may look good, it is little more than “innovation theatre” that essentially “distracts from the real issues” affecting Irish companies.
These issues, according to O’Sullivan, include a need to improve many of the incubation programmes already in operation, and to attract more international investors. He also believes that deployment of Enterprise Ireland’s high potential start up unit (HPSU) funding should be outsourced.
“This is arguably a solution looking for a problem. It’s essentially more about finding ways to use the office space that is being freed up in Dublin due to layoffs in tech, and repopulating the city centre, than promoting innovation,” he said.
He said that creating more space for start-ups won’t necessarily create more start-ups but would definitely lead to existing innovation centres in or around Dublin being emptied out.
“We’d have more start-ups if we had more private capital. This is not about a need for more office space for start-ups,” he said.
“We have a really rich seed funding ecosystem but there are very few deals being done for companies looking to raise between €5 million and €10 million so there is a need to encourage more international investors to look at Ireland,’ he added.
Ultimately, according to O’Sullivan, if an incubator is on the cards, it shouldn’t be in Ireland.
“If we are looking to help Irish companies scale we should establish innovation centres in London and Berlin, rather than Dublin,” O’Sullivan said. “This would allow start-ups to have easier access to international capital, to be able to hire local talent, and to have more of a presence in the markets in which they wish to scale.”
