19 Jan Interview with Leo Clancy, CEO of Enterprise Ireland
BF: Ireland’s economy has been performing extremely well in recent years. It was the only economy in the European Union to grow in 2020, despite the impact of COVID-19, and 10.1% growth in its gross domestic product is forecast for this year. What are the key factors behind Ireland’s economic success and how resilient is the country to ongoing global challenges?
Leo Clancy: We are in a strong economic position, but there are no economies that are not facing challenges at the moment. Ireland is experiencing some of the same challenges as other economies, which relate to inflation; supply chain issues; labor pools, talent and skills; competitiveness; and global market uncertainty. These are the concerns that are top of mind for businesses as we face a tougher 2023.
However, Ireland is starting from a much stronger base than most countries around Europe and the world. We saw continued strong economic growth during the pandemic, with strong corporate and personal tax receipts, and that gives the government in Ireland the wherewithal to not just plan to have a surplus next year, but also to have put away money for this year from a surplus generated in 2022—which is almost unheard of in modern Western economies in these troubling times. From that point of view, we are in a really good position. And the great thing is that, although global markets are entering a challenging time, Ireland’s economic success is broad based and we have a very strong local economy. We have managed our public finances well in terms of spend and we also have huge diversity among our exporting businesses in sectors such as technology, biotech, medtech, financial services, engineering and food, for example. All of those sectors are performing well, which is important for the economy overall.
BF: Recent events such as the pandemic and now the conflict in Ukraine have caused major challenges for global supply chains. How is Ireland coping with the new paradigm in trade?
Leo Clancy: Ireland has been affected in the same way other countries have. However, we are a very modern economy: we are less dependent on heavy materials and heavy fuels than most countries and we also export very high-value goods. Although Ireland has been impacted by shortages of components, key materials and the cost of energy, our businesses have managed the situation very well. This is because Ireland has been extremely innovative in terms of sourcing and adapting its supply chains. In addition, we are an open, global economy, which is an important advantage in securing sources for our imports, as well as markets for our exports.
BF: Enterprise Ireland is the country’s lead actor in providing support for Irish enterprises to start up business, grow, innovate and win export sales in global markets. This year, the agency reported that exports from the companies it represents had grown by 12% in 2021. How would you define Enterprise Ireland’s ethos?
Leo Clancy: We are a government agency. Our sole reason to exist is to contribute a return to the Irish taxpayer and we measure that most directly by the number of jobs created by the companies that have invested here. We support companies in manufacturing and internationally traded service sectors, which are, by definition, exporting sectors in the main. Those companies’ exports create economic activity in Ireland, which creates jobs. As a result, the economy gets a return from the taxes their employees pay, as well as taxes paid by the companies for the value they create here, the purchases they make in the domestic economy and value added tax, among other things. That is how our value cycle works.
Enterprise Ireland’s ethos is about helping our client companies to succeed in every possible way and we work closely with them to help ensure that they succeed. We support businesses from the pre-seed stage in terms of investment all the way through to supporting large companies with their innovation, research and development plans, their capital investment plans and everything in between.
Currently, we support about 4,500 companies as direct clients and, through our network of regional enterprise offices, we also support another 7,500 local businesses that are potential exporters and, hopefully, the growth companies of the future.
BF: Small and medium-sized enterprises account for around 99.8% of all active businesses in the country. Enterprise Ireland has consistently promoted small firms and entrepreneurs, most recently through its Big Ideas event in Croke Park, where frontrunners in Irish research pitched their solutions and business propositions to an audience that included investors. How would you assess the level of support for SMEs in Ireland?
Leo Clancy: SMEs are very well supported. Enterprise Ireland is a large, well-resourced agency that supports, not just SMEs, but they are at the heart of our strategy. The annual Big Ideas event is about giving innovators the opportunity to create new businesses from a university setting, typically through our commercialization support. It is a good example of how we get involved early with researchers who might be able to have a business in the future based on innovative technology they are working on. We help them to shape their idea, we bring in commercial experts and we take the idea through to the point where it becomes a business.
We are also the largest domestic venture capitalist in the world by deal volume. Beyond the pre-commercialization phase, we support about 125 companies annually to start their businesses and offer pre-seed and seed-stage funding.
BF: Ireland has seen a boom in its technology sector and, in November, the government invested €40 million in new disruptive technology projects. What factors have made it possible for Ireland to become such a key player in the world of technology and how will this funding encourage its continued rise in this area?
Leo Clancy: The foundations of our proposition in technology go back to investments made by multinationals in the country. In 1958, Ireland started a deliberate strategy to attract foreign direct investment, which by the 1970s had turned toward investments in technology. We saw cutting-edge companies like Analog Devices and Digital Equipment Corporation investing in Ireland. Analog is still going strong in the mid-west of Ireland, while Digital Equipment closed its operations here in the late 1980s or early 1990s. This created a wealth of distributed talent that went on to create new Irish businesses.
This meant that, when Silicon Valley started to blossom, we were able to track some of its technologies and that fed through to the development of an excellent ecosystem for further multinational investments here. But it has also spawned a huge amount of startup activity from people who have gained a lot of experience working for multinational tech investors and have then started their own businesses.
The disruptive technology innovation fund is a program run by our agency, which is focused on bringing together collaborative research on themes that will not be commercialized for at least three to five years. This means we are investing very early in high-risk projects and helping companies to commercialize the ideas of the future. The program is a deliberate move by the government to stimulate collaboration between international companies based in the country, Irish SMEs and academia. The scheme started in 2018, runs for 10 years and involves total funds of €500 million. We are currently running our fourth call for proposals under the program and it is going very well—we are just at the point where we are seeing one or two companies beginning to exploit the intellectual property that we initially funded, which is very exciting.
BF: Ireland has committed to having net-zero carbon emissions by 2050, which has sparked a large rise in green investments. What opportunities are emerging around the country’s drive to lower carbon emissions?
Leo Clancy: We are seeing a substantial number of green investments being made by companies and we have really innovative early-stage and established Irish companies working in areas such as the circular economy, decarbonization and advanced heat pumps. Just one example is Kingspan: it is one of Ireland’s largest companies and has created a combined solar-photovoltaic and roofing panel—there are lots of interesting innovations like that coming through.
Ireland also has a huge amount to offer Europe in terms of renewable energy. Our current energy consumption on the island is around 6 gigawatts and we think we have the potential to generate 50-70 gigawatts in offshore wind. With that large overcapacity, we could become a European powerhouse for green energy, green hydrogen and more. As well as exporting that green energy, we can use it for attracting energy-heavy industries back to Ireland.
BF: The US is undoubtedly one of Ireland’s largest markets in terms of trade and investment. American FDI in Ireland stood at $390 billion in 2020, more than the US total for Brazil, Russia, India, China, and South Africa combined. Have the two countries created a productive environment to exchange knowhow, trade and investment?
Leo Clancy: Ireland is also the ninth-largest investor in the US—there is a huge return back into the US ecosystem from Ireland. In total, our client companies employ about 207,000 people in Ireland and 100,000 in the US and Irish companies employ over 1.2 million people internationally. We are a small island, but when our companies do well, they not only create economic benefits here, but they generate even more outside the country. And the US is one of the single biggest beneficiaries of that.
Enterprise Ireland has 40 offices around the world, including six in the US. It is a key market for us: Ireland’s exports to the US grew by 14% last year and we expect to see further growth, as Irish companies have a lot to offer the US market.
BF: You became CEO of Enterprise Ireland in 2021, before which you worked for many years at the IDA, supporting international companies establish in Ireland. What are your current top priorities as CEO of the agency?
Leo Clancy: My top two priorities are the clients that we serve and making sure that our proposition for them gets better and better all the time. We need to ensure that our organization remains aligned to our clients’ needs and that our people are motivated, engaged and highly skilled. For me, the single biggest priority in my role is to create the right foundations so that more Irish companies can scale globally. At the moment, the Irish-owned enterprise sector represents about two-fifths of export-oriented jobs in the country and international companies represent about three-fifths. We want to work over the next 10 years toward balancing that equation and seeing many more Irish companies become global leaders.