Ian Browne, Managing Director of NDRC
What is Dogpatch predicting for Irish tech in 2023? We work primarily in the technology sector and all indications are that 2023 will follow the same path as the tail end of 2022. There will be continued pressure on headcount at all companies as the markets focus on more sustainable growth. Funding, particularly at the later stages, will be much more difficult to come by and there will be delays in the IPO market as late stage companies wait for the markets to rebound.
At the early stage there are more reasons to be optimistic. Irish Venture Capital firms secured over €300m for their seed funds in the past 18 months meaning there is plenty of funding available for those founders who are just starting out. In fact, you can argue that there has not been a better time to go for your first institutional round of capital in Ireland.
While layoffs are unfortunate and inevitable, that also lets some people explore new opportunities and lets startup companies access quality talent who have experience from working in and growing technology companies. The combination of available talent and a supply of capital should allow some really interesting companies to be started in 2023.
2022 was a turbulent year for global tech, do you think things will get better in the sector? There is a lot of pain in the near future as capital markets continue to react to the uncertainty. It will be more difficult to raise capital, sell to enterprise customers and there will be a continued focus on cashflow and profitability. The optimist in me still thinks about the last recession and how it is an opportune time to start something new.
In 2008, the iPhone had just arrived and so it spawned a plethora of new companies which went on to drive the technology sector for 15 years. Nobody knows what the next technology stack really looks like but it is apparent that artificial intelligence is still at the bottom of the s curve. AI has proved some incredible advancements in drug discovery, new models of image, text and video creation and the algorithms becoming more accessible could lead to a new wave of interesting opportunities.
So the forced financial constraints plus the emergence of new technologies gives me hope that Ireland can build some fantastic companies in the coming 12-24 months.
How can Ireland become leaders in tech in Europe in 2023? By investing in people. We should get smarter on startup Visas – learn from countries like Portugal and Estonia who have leaned into the post covid trends to attract high quality entrepreneurial talent.
We should also be much more ambitious. The French government invested over €1B into AI and we need the same level of understanding and ambition from our political leaders to help to continue to drive the economy.
I think it is a good thing that we are looking at the FDI strategy and if it is really fit for purpose for the next 20 years. Over 50% of economic growth is delivered by less than 5% of companies. High growth technology companies are important for the economy and the only two ways they exist is either by importing them via FDI or creating them indigenously. I think it is time we invested heavily in the latter – creating a much easier on ramp for more smart people to start ambitious companies. They should be supported to do this – by government, by corporates, by venture capital and by the whole startup ecosystem.