Submission to the Department of Finance in respect of the Public Consultation on
The Knowledge Development Box on behalf of
The Knowledge Box, the MNCs and #Vision2020 Startup Island
(Ireland’s ambition to be a global startup hub)
8th April 2015
“Ireland...will become recognised as a place where good ideas can be transformed
into excellent businesses and new jobs will be created as international investors and
mobile entrepreneurs seek Ireland out as a location of choice. “
Minister Bruton – National Policy Statement on Entrepreneurship in Ireland 2014
About Startup Ireland
Startup Ireland is an independent not-for-profit public/private partnership committed
to the goal of making Ireland a global startup hub by 2020. We seek to unify all those
stakeholders in the startup industry in Ireland around this goal which we call
‘#Vision2020 Startup Island’. By startup we mean high impact technology (in the
broadest sense) businesses that have the potential to grow rapidly internationally
from their base in our country thereby creating significant jobs and innovation in
Ireland.
Our membership of Startup Nations, the global network of national entrepreneurship
initiatives, gives us unrivalled access to international best practice in creating the
right conditions for high impact entrepreneurship thereby maximising the impact of
this key engine of economic growth in our country.
We have a national strategy which focuses on helping create internationally
competitive startup hubs in each of Ireland’s cities by 2020. A key building block
towards this is our flagship project, the Startup Gathering. Comprising 5 Days, 5
Cities, 5 Industries this is Ireland’s national startup expo on the theme ‘Start, Scale,
Succeed from Ireland’.
Ireland is fortunate to have an intense concentration of the world’s most influential
international technology corporations thanks to a considerable degree to the work of
the IDA, and a deep and proven government commitment to innovation and the
startup agenda through the work of our state enterprise agency Enterprise Ireland.
Tax is important but it’s not everything – deepening the startup ecosystem
makes all the stakeholders more embedded
Based on international experience, strengthening of Ireland’s startup sector through
incentivising certain key ‘mission critical’ activities of the multinationals to be located
here will help make the multinationals more deeply embedded in Ireland for the long
term due in part to a strengthening of the access to the network of innovation and
talent provided by Irish and international startups that cannot be easily replicated in
other European cities.
Therefore our submission does not seek to answer in detail the quasi technical
questions listed in the Public Consultation document, instead our objective is to
constructively highlight the potential gain to Ireland as a knowledge intensive
economy if the Knowledge Development Box is configured in the optimal manner to
create the incentive to multinationals to locate those knowledge intensive activities in
Ireland that are integral to successful startup ecosystems in advanced economies,
namely R&D, corporate venturing and corporate startup accelerators in Ireland.
Effectively it could be seen as a shopping list of what the relevant stakeholders
already based in Ireland could be incentivised to do if the Knowledge Development
Box is configured appropriately, as well as helping incentivise the next generation of
upcoming multinationals to locate knowledge intensive jobs in Ireland.
Our submission is composed of two parts, this document by Startup Ireland and an
accompanying research document in part two below which we commissioned from
specialist consultants, Ruby Consultants, who examined key components of the Irish
ecosystem, including activity of major companies involved in startup activity support,
research and high value employment.
Introduction – why a strong domestic startup sector is essential to FDI
In order to compete internationally for foreign direct investment we must identify
those factors that will have significant systemic framework benefits to Ireland’s
attractiveness when compared to competing countries. We believe that a strong
indigenous startup industry offers this because increasingly both large multinationals
(MNCs) and rapidly growing companies (that are scaling up) want direct exposure to
high impact startup clusters in their industry sector in close proximity to their R&D
centres. Many advanced economies recognise this and have created programmes to
attract international startups to their cities to work with corporates located there (the
Boston Mass Challenge for example).
We believe that Ireland’s unique advantages can make it a nexus of innovation
between the EU and the US if the Knowledge Development Box is configured in a
way to encourage the above companies to locate their mission critical R&D in
Ireland.
Startups are the leading creators of applied innovation in modern economies. MNCs
have recognised this and applied the open innovation model to seeking to harness
the best startups to collaborate with. In other startup ecosystems (for example Tel
Aviv or Silicon Valley) symbiotic relationships between the R&D centres, corporate
venturing (please see image below) and corporate backed startup accelerator
activities of the MNCs and high impact startups are well established.
These interface points have successfully enabled ‘effective engagement’ (defined as
genuine collaborative activities occurring within an effective network which yield
symbiotic outcomes to the participants) through MNC open innovation activities such
as corporate backed venturing activities and corporate backed startup accelerators.
Effective engagement creates deep network linkages that are difficult to replicate in
outer competing ecosystems. This in turn increases the likelihood that the top tier VC
firms will locate in Ireland attracted by the breakouts with deep, world beating tech.
A new understanding of the essential role of startups in modern economies
Research published by the Central Bank of Ireland in 2013 (Action Plan for Jobs
2014) concludes that 67% of new job creation comes from companies within their
first five years. Research from the Kaufmann Institute in the United States (Kauffman
Foundation Research Series: Firm Formation and Economic Growth 2013) also
indicates that new and young businesses are the primary drivers of net job creation
in modern economies.
A new industry emerges – the industry of high impact startups
Startup hubs thrive in dense networks with substantial inward and outward flows of
people, ideas and capital. The startup industry of Silicon Valley has been optimised
in a way that creates startups that can achieve billion dollar valuations rapidly on an
almost predictable pipeline basis, please see image below.
Source: Wall Street Journal, February 2015
The economic benefits of having a global startup hub in Ireland
A comparison between Dublin and Tel Aviv (Israel) of the outputs of the ICT/Tech
startup industry are contained below in the chart Startup Ireland presented to the
Dail Committee on Jobs, Enterprise and Innovation in July 2014. The potential
benefits to the Exchequer in terms of CGT, Corporation Tax and PAYE are
substantial as illustrated by this comparison.
Density and Velocity are essential characteristics of successful startup
ecosystems
Successful startup ecosystems in advanced economies are composed of dense
networks comprising universities, multinationals, state agencies, investors and
professional service providers around the entrepreneurs that form high impact
startups. There are many other stakeholders directly and indirectly involved in the
dense network that underpins success in the startup industry. These can be
summarised by stage of development as:
Start Stage - CoWorking Space, Incubators, Networks & Groups, Startup
Programmes.
Scaling Stage – Accelerators, Embassy Commercial Attaches, Enterprise Support
Agencies, Funding, Multinationals, Research Centres, Tech Transfer Offices,
Networks & Groups (both national and international), Stock Exchange, and
Professional Service Providers.
Well developed startups hubs are characterised by density and velocity within this
network of stakeholders illustrated above. Density is the physical proximity of the key
stakeholders of a mature startup ecosystem while Velocity is how quickly startups can
progress through the ecosystem without encountering undue obstacles or delays. As
time to market and the development of virtual products and services grow
exponentially the nexus between the fundamental pillars of successful startup
ecosystems has become critically important.
Multinationals and large corporates are key players in these networks as they are often
the first clients for high impact startups thereby providing the initial sale that validates
them and helps the startup raise funds from Venture Capitalists. Accordingly in
choosing an EU location international high impact startups (ones that have raised
significant initial investment) have two key questions:
A. Can I access the senior decision makers in the mission critical engineering
department of my key potential multinational clients?
B. Can I raise a €5m A or substantial follow on round in the city (preferable from the
venture arm of my first big multinational client?
The key role of multinationals in advanced startup ecosystems around the
world
As startups are a key source of innovation, most innovation driven multinationals
have strategic interfaces with the startup sector in the cities where they operate.
Examples of such interfaces include:
1. Acquisition Activity – The book ‘Startup Nation’ (D.Senor & S.Singer)
outlines that Cisco had by 2008 acquired more companies in Israel than Cisco
had bought anywhere else in the world. Cisco’s investment arm made another
$150 million in direct investments in other Israeli startups and $45 million into
Israel focused venture capital funds. In total the book says that Cisco had by
2009 spent $1.2 billion to buy and invest in Israeli companies.
2. Investment/Venturing – As can be seen from the ‘Top Corporate Investor’
table above many multinationals have active corporate venturing arms
investing in startups and the level of activity in this area is growing
internationally.
3. Collaboration – A number of multinationals from Disney to Telefonica
operate corporate backed acceleration programmes that are active around the
world to provide a structured interface between the corporate and selected
startups.
4. Community Development – A high profile example of successful grassroots
startup community development is the Google Campus initiative present in a
number of capital cities around the world.
5. Breakouts - Successful startups emerge from ecosystems where there is
significant applied research being performed and this spills over into
ecosystem wide benefits. Indeed many successful startups are often the
result of what is termed ‘Breakouts’ whereby a senior engineer/researcher
from a large corporate partners with a professional consultant from one of the
international professional services companies to commercialise technologies
that have the potential to scale rapidly.
Startups often catalyse the entry of MNCs into a country
According to the Times of Israel South Korea have been busy building international
network that complements their ambition to be a global startup hub of Asia. The firstever Korea-Israel Creative Economy Forum. Israeli creativity, Kim told The Times of
Israel, was much admired in his country, “and has special strengths and capabilities
that, when joined together with the strengths of the Korean economy, can create an
economic powerhouse.”
The Times of Israel piece outlines the typical entry strategy, electronics giant
Samsung, which has been operating in Israel for about six years, after it acquired
Ramat Gan-based Transchip Israel it was the company’s first foreign acquisition in a
decade. As of now, Samsung’s two Israeli facilities, employing upwards of 50
engineers between the two of them, are the only Samsung R&D centers outside of
South Korea. Attending the event were Israeli companies and investors looking to
work with Korean powerhouses like Samsung, Hyundai, LG, and the many other
industrial giants in that country, along with a group of 15 Korean students who are
studying in Israel (part of Tel Aviv University’s StarTAU entrepreneurship program),
where they are learning the Israeli way to start-up success.
Achieving the goal of Ireland becoming a global startup hub – what is the
driver?
What is notable about the startup industries that Ireland can learn from is that:
1. Their rapid economic development (in particular of their startup sector) has
been in 10/15 years as opposed to decades, South Korea’s bid to leverage
their substantial MNCs to the benefit of their startup sector is only beginning in
earnest now. Israel had no startup industry 20 years ago. Culture change can
be achieved in a finite amount of time, the book Startup Nation says that
Israel economically was in a ‘dire state just a little over half a century ago’.
2. Economic landmass, population and outward orientation are in our favour as
with two of the members of the Top 20 Startup Ecosystems (Tel Aviv and
Singapore).
However at the heart of any successful startup ecosystem must be an economic
engine – we believe that the proposed Knowledge Development Box as biggest
structural reform of the fiscal framework in the history of our state offers the ideal
opportunity to create this economic engine for Ireland’s startup sector.
How might the configuration of the Knowledge Development Box best support
Ireland’s startup sector
It is widely accepted that incentives often shape the ecosystems of business activity,
current corporation tax incentives in Ireland have created a framework that supports
job creation (frequently in the areas of sales, tech support, customer care, call
centres) but often not knowledge intensive jobs. The book Startup Nation (D.Senor &
S.Singer) suggests multinationals set up their call centres or IT services in Ireland
but not their ‘mission critical’ R&D work. If one looks at Israel the tech MNCs many
have their mission critical R&D located in Tel Aviv, as a result 39% of Israeli hightech employees work in the R&D departments of multinational companies in Israel.
We believe that the existing ecosystem of activities that the multinationals located in
Ireland currently conduct can be built upon to move their activities located here up
the skills ladder, thereby creating increased value in the economy and capturing for
Ireland a higher proportion of the value add contained in products and services
facilitated through Ireland.
We also believe that, in line with experience of other advanced economies, the
startup sector is an essential component of this deepening of the knowledge
intensive nature of industry in Ireland. To support this it is essential that the
Knowledge Development Box is configured in the optimal manner to create the
incentive to multinationals to locate those knowledge intensive activities in Ireland
that are integral to successful startup ecosystems in advanced economies, namely
R&D, corporate venturing and corporate startup accelerators in Ireland.
PART 2
Knowledge Development
Box Submission
Startup Ireland
3/16/2015
FAO: Eoin Costello
Startup Ireland
Re – Knowledge Box Submission research support
Ruby Consulting are delighted to respond to your request for research support for Startup Irelands
submission to DJEI on the development of the Knowledge Box. We have been a part of the
development of Startup Ireland for almost one year now and are delighted to support this important
piece of the jigsaw to support the development of high potential startups in Ireland.
Ruby Consulting have been involved in technology commercialisation and the support of startups in
terms of investment finance, scaling and internationalisation for nearly ten years and we see the
development of Startup Ireland (SUI) as an important piece in the ecosystem in Ireland. It is a relevant
extension of SUI capability to examine the Knowledge Box (KB) and its impact upon the startup system,
including those that are spinning out of larger corporates, licensing technologies from Research
Practicing Organisations (RPO) or other relevant starting positions.
This report is constrained by a number of important parameters. The timing involved to the deadline
for submissions to DJEI on the KB, the lack of transparent complete data on research practitioners in
Ireland and the fact that this is a new area for SUI to investigate means that this report has to use a
number of proxy metrics to examine the issues, outlined in detail in the methodology. This report
cannot claim to have comprehensive data and may be subject to different interpretations as more data
becomes available, although we understand that other authors will review this study in order to further
support a single submission to DJEI.
Our Understanding of this project
The Knowledge Development Box is a tax treatment of IP – whether that be Patents, Copyrights, Brands
or possibly extending to process IP and trade secrets. It is designed to replace the Double Irish system,
whereby companies were able to route profits/revenues through Ireland, Luxemburg and other probusiness tax jurisdictions to reduce their overall tax bill. The tax rate is purported to be approximately
5% to maintain a tax leadership position in Europe.
http://www.irishtimes.com/business/economy/knowledge-box-tax-rate-likely-to-be-5-1.2064954
The OECD are alleged to be proposing a heavy orientation towards Patents only, rather than a wider
interpretation of IP, which would be challenging for startups in Ireland or indeed anywhere. Patent
development is dominated by hardware and life sciences and the majority of startups in Ireland are in
the ICT sector.
In the development of the KB, it is important to look at the existing R&D tax credit scheme, whereby
companies are able to claim a tax credit for work that is counted as research. There is anecdotal
evidence that this system may be taken somewhat generously by some clients and this may be affecting
the development of the new KB.
In this report we also examine the amount of active research is being engaged with in Ireland by Irish
and international companies, using proxies such as patenting, PhD employment and where possible
utilisation of the existing tax credit. We recognise that this information is sensitive to the companies
and we will only be able to take a surface view of this situation on behalf of SUI.
In this report, we analysis several sources and aspects of the research community in Ireland, with
particular reference to startups and the development of the KB. We look at which companies are
research active, which companies are engaged with the startup community and look at specific case
studies to illuminate the position of SUI in their submission on the KB.
Overview of Methodology
We reviewed a number of different sources including:

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

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www.cso.ie – number of people with PhDs active in Irish industry
www.patents.com – review of the number of US patents registered by Irish based inventors
www.top1000.ie – Top companies based in Ireland by global headcount and cross referenced
by revenue
www.linkedin.com – To review the number of PhDs in each of the top companies.
www.newmorningIP.com – to review Irish patenting activity
We started our methodology by isolating the top companies operating in Ireland by headcount down
to 1000 and identified 180 companies. We then cross referenced those companies with revenue above
€260m and eliminating any of those with less than 100 staff, in order to eliminate those entities which
are here for tax or residency purposes only, adding 80 companies. We then cross referenced these
companies with google searches on how many staff they have actually in Ireland, how many of them
have a corporate venture fund (CVF) or support startup accelerator programmes. We checked Linkedin
to examine how many staff based in Ireland had a Linkedin account and did an extensive search for
terms such as PhD, Doctorate and so on. This forms the basis of the accompanying table of information
included in this report.
We then examined patent records in Ireland, in the US where the inventor was based in Ireland and
utilised available information on the R&D tax credits to gain an understanding of the corporate research
sector in Ireland. Finally, we analysed and gave our interpretation as to how this impacts upon the Irish
startup community and then then relevance to the KB submission to DJEI.
Discussion & Analysis
We outline here our discussion and our own analysis of the KB as it pertains to Startups in Ireland. It is
important to reassert the caveats listed in previous sections, this analysis is more important in the ratios
and proportionality discussions, rather than the absolutes.
Company analysis
We refer here to the accompanying database of ~280 companies in Ireland, sorted by number of global
employees and then by revenue in Ireland, down to 1000 staff or above €250m revenue with more
than 100 staff. This excludes examples of companies that have very low numbers of staff processing
revenue through IFSC and similar circumstances.
We can review these companies in terms of the type of activity so for instance some of the larger food
processing companies, hospitality groups and building materials groups would register in this table, but
their activity may not affect either the startup community, funding the ecosystem or indeed the wider
ramifications of the knowledge box, so from this list, we estimate that approx. 100of them are
significantly practicing research practicing entities and/or supporting the development of the startup
ecosystem.
When we look at which of these companies have global accelerators or global corporate VC funds, the
number breaks down again to approximately 25 corporate venture funds and approx. 35 with
accelerator supports. This would concur with global views, whereby corporate venture funds are only
beginning to be formally adopted as against individual corporate investments and the growth in
accelerators globally, particularly in software and services has been sharp. Reflecting upon their activity
levels in Ireland, we see real on the ground activity from companies like SAP, MasterCard, Accenture,
Bank of Ireland and AIB, Eircom and some special examples in companies such as PCH and Bell Labs.
Global activity that we might expect to see reflected in Ireland could include the Diageo accelerator,
Google Campus and Apple. The recent retirement in the Wayra accelerator is a sore blow for the
Dublin/Ireland accelerator community. It is fair to say that Dublin is as well represented as it could it
expected in terms of accelerator supports, although other groups could launch in Ireland, but it is
disappointing to see how little activity there is from corporate venture funds, with some small
exceptions in the life science sector.
The life sciences are a special factor in terms of VC funds with large global presence and relatively little
activity in Ireland except for examples like Opsona in Trinity. Some of the larger technology companies
like Google have strong VC offerings based in London but their activity in Ireland is often based around
acquisition of companies, rather than VC activity, e.g. Green Parrot.
Knowledge Box
The Knowledge Box (KB) concept is one whereby definable R&D created in a country would be subject
to a lower rate of taxable income than other enterprise income. Versions of this exist across Europe
already, notably in the UK who launched a Patent box with a tax rate of 10% in 2014. It should be
noted that this arrangement is being strongly challenged by Germany and the OECD and its long term
future is in some doubt, although most commentators expect elements of compromise
http://www.ft.com/intl/cms/s/0/d2c783dc-7a54-11e4-8958-00144feabdc0.html#axzz3Sr9DAtzI
In the Irish context, negative media attention was drawn upon our tax efficient arrangements, known
as the ‘Double Irish’ whereby taxable revenues/profits/transfer pricing and Netherlands, Cyprus/Malta,
Irish and Caribbean companies were used to minimise profits. It was argued that Ireland benefited
from this arrangement by attracting companies who would pay employer taxes, employ more people
and so on, combined with our already low corporation tax rate of 12.5%. The Double Irish and other
similar arrangements n Luxembourg are coming under unsustainable international pressure, including
from the US who are seeking ways to repatriate EMEA held funds back to the US, (considering amnesties
etc). It is proposed that the development of a Knowledge Box (KB) will support the development of
more definable IP creation in Ireland by subjecting it to a favourable tax regime, thought to be ~5%
along with the equivalent lowest rate available in Europe.
Some definitions of IP would imply that only patents would be acceptable, but this is not sustainable in
the Irish context, given that so many of our enterprise are orientated towards the technology sector
where patenting is not as common an issue as copyrighting, branding and so on. Life sciences and
engineering dominate the patent landscape, but the key factor to consider would be novelty in the
research outputs, whatever the context of its legal standing.
Related to this concept is the R&D tax credit system, whereby companies can get a tax rebate on
activities that are covered under a Revenue defined scheme. It is noted that applications to this scheme
have increased sharply in recent years and indeed we note the increased efforts being put in place by
professional service advisors in the sector to promote its use and development.
http://www.finfacts.ie/irishfinancenews/article_1026390.shtml
http://budget.gov.ie/Budgets/2014/Documents/Department%20of%20Finance%20Review%20of%20
R&D%20Tax%20Credit%202013.pdf
http://www.arthurcox.com/wp-content/uploads/2013/03/Arthur-Cox-Ireland-as-a-location-for-yourIP-Trading-Company-April-2014.pdf
Patent analysis
We look here at an analysis of US registered patents that cite an Irish based author. We are grateful
for the support of NewMorning IP in this regard. This data is useful in so much as it reflects work that
is being delivered from Ireland and activated in the major global market and as such is a useful marker
of activity. To have 475 patents registered in the US from Irish authors is impressive. Drilling down
through the numbers, we see a number of clear trends. IBM massively dominates and although they
have significant research base in Ireland, it would be interesting to parse their impact upon the Irish
patent landscape also and which technologies are being commercialised here. Life sciences companies
are strongly supported here, especially the medical device sector in the Midwest. Google are notable
to have 9 patents registered in the US citing an Irish author, which might support the contention that
many of the tech giants EMEA HQ are developing more than commercial operations.
To put this in context, analysis from NewMorning IP shows that in April 2014, 263 patents were
registered/filed in Ireland, of whom ~115 were of Irish origin. Interestingly, of the patents filed in
Ireland, Accenture dominates the April 2014 figures, as they do in most months, although this seems
to be not reflected in US patenting figures with an Irish based author.
US based patents from Irish authors – IBM/Life Sci
Assignee
IBM
ANALOG DEVICES, INC.
Cook Medical Technologies LLC
Medtronic
MASTERCARD INTERNATIONAL INCORPORATED
AVAYA INC.
Henkel
GOOGLE INC.
LOGITECH EUROPE S.A.
MICROSOFT TECHNOLOGY LICENSING, LLC
TELEFONAKTIEBOLAGET L M ERICSSON (PUBL)
COVIDIEN LP
HEWLETT-PACKARD DEVELOPMENT COMPANY, L.P.
ORACLE INTERNATIONAL CORPORATION
CAMERON INTERNATIONAL CORPORATION
IVAX
ALCATEL LUCENT
BOSTON SCIENTIFIC SCIMED, INC.
SEAGATE TECHNOLOGY LLC
FACEBOOK, INC.
#Publications
109
23
22
21
20
19
16
9
9
9
9
7
7
7
6
6
5
5
5
4
CSO data
The CSO has deep information relevant to the utility and origin of research enterprises in Ireland and is
represented in the following tables. We first look at the type of research carried out by various sized
enterprises in Ireland and it is important to note the OECD definition of experimental research in
respect of the R&D tax credit and the possible restriction of KB to patent activity.
Business Expenditure on Research and Development (%) by Size of
Enterprise, Type of Research and Year
2011
All enterprises
All types of research and development
Basic research
Applied research
Experimental development
Small (<50 persons engaged)
All types of research and development
Basic research
Applied research
Experimental development
Medium/Large (50+ persons engaged)
All types of research and development
Basic research
Applied research
Experimental development
100.0
4.6
23.9
71.4
100.0
4.0
27.5
68.5
100.0
4.9
22.6
72.5
Novelty is an important factor in this survey, although we draw attention to the OECD definition of
Experimental development
Experimental development is systematic work, drawing on existing knowledge gained from
research and/or practical experience, that is directed to producing new materials, products or
devices; to installing new processes, systems and services; or to improving substantially those
already produced or installed
Looking further into who is delivering this type of work, we look at PhD level qualifications engaged in
Irish based industry, which we cross reference in the accompanying excel chart with Linkedin.
Interestingly, the number almost exactly corresponds which validates in part our use of Linkedin as a
review tool.
Headcount of Research Personnel (Number) by Type of Researcher, Size of
Enterprise, Sex and Year
2011
PhD qualified researchers
All enterprises
Both sexes
Male
Female
Small (<50 persons engaged)
Both sexes
Male
Female
Medium/Large (50+ persons engaged)
Both sexes
Male
Female
1,551
1,114
436
539
434
105
1,012
681
331
Almost 30% of enterprises stated that they were very likely to employ more PhD graduates in the
coming years.
Referring back to our searches of large Irish based companies and their research impact, we searched
their staff for PhD, based on our level of access to Linkedin. This is a proxy metric, but a worthwhile
one, allowing for PhD employment as a proxy for research active and Linkedin 1.25m Irish profiles
having a reasonably strong degree of coverage.
The CSO also highlights the decline from 2000-09 in the number of STEM graduates, while our PhD
graduates increased per capita, we are significantly behind our EU colleagues in this factor of
innovation.
http://www.cso.ie/en/media/csoie/releasespublications/documents/otherreleases/2011/measuringir
elandsprogress2011.pdf
Number of patent applications per capita:
An interesting aside emerges when looking at actual and estimated R&D expenditure by Irish based
companies, whereby it was estimated that ~€1.9bn was the value ascribed to R&D but the survey
could not capture the actual value of R&D spend. It is noted elsewhere in the data that just under
this amount was actually spent, when broken down by region
Actual and Estimated Business Expenditure on Research and Development
by Size of Enterprise, Statistical Indicator and Year
2012
All enterprises
Estimated Current Expenditure - Labour Costs (Euro Thousand)
Estimated Current Expenditure - Other Current Costs (Euro Thousand)
Estimated Total Current Expenditure (Euro Thousand)
Estimated Capital Expenditure - Land and Buildings (Euro Thousand)
Estimated Capital Expenditure- Payments made for licences to use intellectual products (Euro
Thousand)
Estimated Capital Expenditure - Instruments and Equipment (excluding software) (Euro
Thousand)
Estimated Capital Expenditure - Software purchased wholly for Research and Development
purposes (Euro Thousand)
Estimated Capital Expenditure - Software development by company in-house and used in-house
(Euro Thousand)
Estimated Total Capital Expenditure (Euro Thousand)
Estimated Total Research and Development Expenditure (Euro Thousand)
Actual Current Expenditure - Labour Costs (Euro Thousand)
Actual Current Expenditure - Other Current Costs (Euro Thousand)
Actual Total Current Expenditure (Euro Thousand)
Actual Capital Expenditure - Land and Buildings (Euro Thousand)
Actual Capital Expenditure- Payments made for licences to use intellectual products (Euro
Thousand)
Actual Capital Expenditure - Instruments and Equipment (excluding software) (Euro Thousand)
Actual Capital Expenditure - Software purchased wholly for Research and Development
purposes (Euro Thousand)
Actual Capital Expenditure - Software development by company in-house and used in-house
(Euro Thousand)
Actual Total Capital Expenditure (Euro Thousand)
Actual Total Research and Development Expenditure (Euro Thousand)
1,091,281
641,037
1,732,318
12,902
109,491
85,823
14,566
6,612
229,394
1,961,712
..
..
..
..
..
..
..
..
..
Value to startup and Conclusion
There are a number of aspects to this report that pertain to the work of Startup Ireland and more
particularly to its members and the sector it serves.

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
High value ideation and novelty is created by highly qualified leaders and it is important to see
the interaction that our PhD level students have with industry in order to understand the
dynamics of their movement from learning to focussed high value research outputs
The role of corporates in supporting startups that are relevant to them, either through
accelerators or through dedicated VC funds is a new but very rapidly growing concept. It is
important to know which companies are operating these functions in Ireland or internationally
but not yet in Ireland
Understanding the role of the R&D tax credit system to producing high grade research, aligned
with a visible output in terms of patent activity is crucial to the narrative of Ireland providing
an environment of high value, mission critical outputs for international corporates.
With these contexts, it is easy to see the value the startup ecosystem brings to corporates and
also the reciprocal value from corporates to startups. The fluidity of ideas and commercial
activity towards and from corporates and startups is crucial to gain scale for startups,
innovation activity for corporates and increase the value add and tax take that can be gained
for Ireland.
On a patenting basis, Irish based inventors appear to be performing well and are integrated with
international counterparts. R&D tax credit utilisation has risen sharply in line with its promotion as a
tool for larger corporates. PhD employment is still dominated by third level institutions, with approx.
1300 PhDs working in industry, primarily in life science and ICT industries. The missing piece thus far is
the level of interaction from the international corporates towards the Irish SME and startup ecosystem
and this can be remedied by encouraging the use of corporate venture funds, accelerators and linkages
between the industry bodies.
Importantly for this interaction, the Knowledge Box affords a possibility to orientate and direct higher
value research activities at corporate level, perhaps partnering and networking with more nimble
entrepreneurs. This cannot be aligned only with patent activity, as we see, the R of R&D is, according
to the OECD, development of activity to new products or processes. It is here that startups need to be
supported to do innovative work with and for larger international corporate players, increasing the
value of them to each other and to the wider Irish context.