Irish SaaS Companies are building disruptive tech
we celebrate the record funding into Irish SaaS businesses of €97M in the first half of 2021. That is up by 11% compared to the same period last year.
Ireland as an International SaaS Hub
Despite the challenges, Ireland has shown a unique resilience throughout the pandemic. While Europe recorded a 7.4% decline in average GDP, Ireland grew by 3.4% – a growth enviable for most economies, even China. The Wall Street Journal reported that multinational companies in Ireland had a whopping 18.2% growth in 2020. The attraction to setting up SaaS companies is nothing new, with overseas companies setting up their operations in Ireland, Ireland can trace its beginnings as a hub for the software sector way back to 1956 when IBM opened an office in Dublin. Other major players followed IBM’s lead over the years, such as Hewlett-Packard, which arrived in the 1970s; Microsoft, Oracle and Dell in the 1980s; Fidelity and SAP in the 1990s. Since the turn of the millennium, companies such as Cisco and Aon have also chosen Ireland as a base and remain active in the country.
Furthermore, as well as the giants of the software industry, many smaller businesses have set up or moved to Ireland down the years.
It means that today there are more than 900 software companies based in Ireland, employing more than 24,000 people. Ireland is the second biggest exporter of software in the world, accounting for €16 billion worth each year, according to IDA Ireland (www.idaireland.ie).
And despite the pandemic, software businesses continue to turn up in Ireland. For instance, on January 26, HR software provider Personio announced plans to increase its workforce in Dublin five-fold before the end of this year; the company sees this office as the base for its international business and software engineering hub. Personio only opened its Dublin office in April last year and has already grown the team there to 40 people.
Hanno Renner, co-founder and CEO of Personio, said Dublin is an ideal city to have a base to serve the needs of European SMEs: “The city’s business-friendly environment and status, as a well-established international talent hub – one that’s already helped many successful tech companies better serve the European market – made the decision to set up our fourth office here an easy one.”
Why set up in Ireland?
Renner neatly summed up many of the reasons why companies still choose Ireland for a European base. As he said, the government is business-friendly, with corporate tax rates at 12.5% and a 25% research and development tax credit for certain projects. Ireland also has preferential tax rate of 6.25% on income from intellectual property.
There is also a depth of highly qualified talent in Ireland: for example, it is estimated that more than 10% of workers in Dublin are software developers. The pool of potential employees is also growing each year mainly due to the many related courses on offer at Irish Universities – Ireland has the third highest number of graduates in computing, maths and science aged 20-29 in the EU.
The Irish government has also strongly backed the sector over the years and continues to do so. For example, there has been sustained investment – worth hundreds of millions of euros per year – in research and development in industrial and academic settings, which has led to the growth of world-renowned research centres such as LERO, the Irish Software Engineering Research Centre, based at the University of Limerick.
Of course, an added attraction of Ireland these days is that it is now the only country in the EU that has English as a first language, which is a pull for multinational businesses from English-speaking countries. Ireland is also part of the single market, giving it frictionless access to the other 26 countries in the EU. In addition, Ireland is also part of the euro, which is a stable currency and not prone to major fluctuations in value.
Going forward, prospects for the software sector in Ireland continue to look very positive. The sector has managed to largely weather the pandemic, as businesses still need software solutions and have in some cases looking for new solutions to enhance their online presence.
With numerous companies planning to expand their operations this year, there are plenty of investment opportunities for savvy investors in the software sector. Should the pandemic ease there are also likely to be more M&A opportunities.
The Investor Visa programme enables savvy investors to invest in SaaS technology companies, granting them residency with the option to apply for Citizenship after 5 years. Gibson & Associates LLP are experts in Immigration Law and have helped high profile investors to successfully apply for an Investor Visa.