Wednesday, September 26 11:02:59
Ireland's banks must boost credit to companies in the technology sector that want to grow if the country is to become a global hub for digital software firms, the Irish Software Association (ISA) said today. Karl Flannery, Chairman of ISA and CEO of Storm Technology, said Ireland's technology companies should be backed by proper bank lending that recognises the potential of the sector to deliver jobs and an innovation-intensive economy.
According to the latest SME Lending Demand Study by Mazars, 28pc of credit applications by small and medium-sized enterprises (SMEs) are rejected, which is the second highest in Europe.
"While it is difficult to extrapolate these rejection rates to SMEs in the technology sector in particular, the latest Central Bank Quarterly Bulletin shows a year-on-year drop to March of just over 20pc for credit to the core software technology companies. Clearly, there is a need for commercial banks, whose business model has largely been based on property-driven lending over the past decade, to relearn best lending practice, developing expertise in critical high-growth sectors such as technology and backing viable businesses," said Mr Flannery.
He said the recent arrival in Ireland of Silicon Valley Bank will help to accelerate the growth of Ireland's indigenous digital technology sector.
"Silicon Valley Bank expects to lend $50 million over the coming year to Irish technology firms to fill the growing market gap between seed capital and later-stage funding. It deploys "bespoke financing", examining a company's intellectual property, venture capital investors and whether it can disrupt the market in which it operates. Silicon Valley Bank should help to stimulate a shift in the banking sector to provide forms of financing more suitable to viable software technology companies to enable them to scale and, more importantly, to scale internationally," said Mr Flannery.
Phil Cox, Head of EMEA and India and President of UK Branch, Silicon Valley Bank, will keynote the ISA Software Industry Awards, themed 'Innovating, Transforming, Scaling', on November 9.