A unique fund set up 20 years ago to invest public money in West of Ireland-based businesses has generated a return of almost two-and-a-half times its original value and helped provide Ireland’s economy with a €3.3 billion boost, new research has revealed.
An analysis into the socio-economic impact of the Western Development Commission’s Western Investment Fund was carried out for the WDC by Indecon, Ireland’s leading independent economic research and consultancy organisation.
Indecon says the Fund has provided “an impressive contribution to economic activity in the Western Region and has made a significant contribution to the national economy”. It has achieved a financial return on investment of almost 2.5 times its original Exchequer allocation of €31.75m: the fund is currently valued at €73m and has been self-financing since 2010.
The WDC Investment Fund provides seed and venture capital and loan finance to companies and community projects across Donegal, Sligo, Leitrim, Roscommon, Mayo, Galway and Clare. It co-invests with private sector investors on a commercial basis and all returns are reinvested back into the region.
The contribution of companies supported by the fund to Ireland’s economy since 2001 is estimated by Indecon to be almost €3.3 billion.
In terms of employment, the research found that at least 5,300 jobs are supported by fund-supported companies or enterprises when economy-wide impacts are considered. Through the payment of taxes, companies have contributed more than €276 million to the State.
The research found that companies supported by the investment fund have achieved major global success in their markets with companies clocking up an estimated €1.6 billion in exports and collectively spending €396 million on Research & Development (R&D) in the region.
Commenting, Minister for Rural and Community Development, Heather Humphreys TD said: “I welcome this report which demonstrates the very significant and positive impact that the Western Investment Fund has had on the Western Region over the past two decades, in terms of creating jobs and economic prosperity.
“The fund has time and time again provided essential finance to businesses at crucial stages in their development. This has resulted in highly impressive returns for the taxpayer and an ongoing legacy of success and growth for west of Ireland-based businesses and community enterprises.”
Commenting on the success of the fund, Gillian Buckley, Investment Manager at the WDC, the statutory body that promotes economic activity in the western region, said: “The WDC Investment Fund has been a unique source of risk capital, equity and loans, for start-ups, expanding businesses as well as for community or social enterprises in the Western Region. It has driven innovation, supported high quality employment and enhanced the quality of life of its citizens. This has been through the provision of range of services for communities such as childcare, social housing, sports and recreational facilities and enterprise hubs.
“The fund has proved a very patient investor and even though investment is a calculated risk, the report shows the very impressive impact it has had on the region. A great number of supported companies have reported that they would not be here today if it was nor for the early-support of the fund which has helped businesses to leverage further funds.”
The Indecon research also found:
From 2001 to 2020, over €61 million was invested or lent by the fund to 234 entities including SMEs, community or social enterprises, creative projects and strategic initiatives
70% of employment in supported SMEs are graduates – 30% above the national average
96% of companies surveyed indicated that securing funding was either very significant or significant for their business or organisation.
100% of community organisations surveyed stated that the investment fund has enhanced the quality of life of its citizens
Companies supported by the investment fund tend to have a more gender-balanced leadership team than typical companies.
Tomás Ó Síocháin, Chief Executive Officer of the Western Development Commission, said: “The WDC Investment Fund was established at a time when there was little investment money available to business to help them expand. The remarkable success of the fund over 20 years is to have changed the culture around investment in the region, to help develop key sectors like MedTech and in doing so, to use the profit on investments to re-invest in new business and to lend to communities across the region.”