Bridging the Finance Gap for Women Entrepreneurs

19. Ireland: Policy insights on early‑stage finance

Professor Colette Henry
Dundalk Institute of Technology and Griffith University

Kehinde Ogunjemilusi
Dundalk Institute of Technology

Background

Ireland is recognised for its “pro-enterprise policy framework” (DETE, 2022[1]) and as such, benefits from a vibrant entrepreneurial ecosystem that supports entrepreneurship activity across the new venture creation process (EntrepreneursData.com, 2024[2]). In 2021, Ireland was the fastest growing economy in the European Union (EU) and continues to be seen by many as a “dynamic hub for start-ups” (Economic Times, 2022[3]). A high graduate employment rate of 83% (Higher Education Authority, 2023[4]), a relatively low unemployment rate of 4.8% in 2023 (OECD, 2023[5]), a growth projection of 3.6% predicted for 2025 (European Commission, 2024[6]), and a unique post-Brexit positioning1 have made Ireland an attractive strategic choice for both Foreign Direct Investment (FDI) and domestic business development.

Ireland is estimated to be home to 260 000 small- and medium-sized businesses (SMEs), the majority of which are micro-enterprises employing less than ten employees (EntrepreneursData.com, 2024[2]). Reflecting global trends, most of these businesses are led by men (GEM, 2022[7]). However, early-stage women’s entrepreneurship has been consistently rising in Ireland, increasing from about 8% in 2018 to 11% in 2021 (GEM, 2022[7]). As a result, Ireland currently has the third-highest rate for early-stage women entrepreneurs across European countries with some 1 400 women reported to be starting a new business every month (TechCentral.ie, 2022[8]). Women’s businesses in Ireland are spread across a variety of sectors but are mainly concentrated in services, healthcare, retail and hospitality (OECD/European Commission, 2023[9]).

Until recently, Ireland had no dedicated women’s entrepreneurship policy (DJEI, 2014[10]; OECD, 2021[11]). Enterprise Ireland’s “Action Plan for Women in Business” (Enterprise Ireland, 2020[12]) was a welcome and significant change to Ireland’s entrepreneurship policy landscape. This was the first time that a national government agency in Ireland had developed a strategy focusing exclusively on women’s entrepreneurship. The Plan acknowledged the multiple factors contributing to women’s under-representation in entrepreneurship and outlined four key objectives with 24 policy actions designed to increase the number of women-led established companies growing internationally, women in middle and senior management roles, aspiring women entrepreneurs, and women-led high-potential start-ups (HPSUs). The Plan has yielded positive results within the HPSU sector with Enterprise Ireland reporting that 27% of the 161 start-ups they had invested in are women-led, up from just 8% in 2012 (Enterprise Ireland, 2020[12]). However, women entrepreneurs in the non-HPSU sector in Ireland still appear to struggle to access start-up and early-stage finance.

Policy issue: Women entrepreneurs struggle to access start-up and early-stage finance

Access to finance continues to be a major challenge for women entrepreneurs globally (OECD, 2021[11]; OECD/European Commission, 2023[9]; OECD, 2023[5]), including in Ireland. Reasons cited include women’s lower self-confidence in their financial skills compared to men, persistent gender stereotypes and social norms, and women’s limited time availability given their family responsibilities (OECD, 2023[5]). In Ireland, while several sources of entrepreneurial finance are available, many women entrepreneurs appear to be limited by the amount of money on offer or by strict eligibility criteria as many funds require guarantees, collateral or matching funding that most women are unable to provide. Many Irish funding sources focus on sectors in which women either do not predominate or are significantly under-represented (Killeen, 2022[13]; OECD, 2021[11]; Henry, 2024[14]).

Access to start-up and early-stage entrepreneurial finance has been especially problematic for Irish women entrepreneurs. This may be due, in part, to a shortage of appropriate funding sources and a continued prioritisation of high-growth, high-tech and export-oriented new venture creation. Another challenge is that Ireland has a fragmented entrepreneurship policy landscape in which policies are often dispersed across multiple government units and reports (OECD, 2016[15]; OECD, 2019[16]). While these issues are not exclusive to Ireland, they are not conducive to the strategic promotion, support and sustainability of women’s entrepreneurship.

A recent study (Ogunjemilusi, forthcoming[17]) used screening questionnaires and interviews to explore the financial strategies, funding experiences and perceived funding barriers of 43 women entrepreneurs at the start-up and early-stage of business development. Findings revealed that 99% of the women entrepreneurs started off by self-funding and bootstrapping their ventures, with many attempting to access external finance thereafter through a range of sources including their Local Enterprise Office (LEO), Enterprise Ireland, banks, credit unions, Microfinance Ireland or investment funds. Many of the women described their funding experience as “difficult” and “challenging.” Some women perceived gender bias in the funding application process such as funders’ stereotypical (male) view of entrepreneurship and their lack of understanding of women entrepreneurs’ unique businesses as well as the different challenges they encounter. In some cases, there was a sense that the lengthy and overly complex funding application process was disproportionate to the level of funding being offered. Some of the women entrepreneurs also acknowledged their own lack of understanding of the funding landscape.

Most importantly, the study highlighted a specific gap in finance provision for those women entrepreneurs who fall between the category of micro-small business (i.e. the type of business typically supported by Ireland’s LEOs) and high potential start-up (i.e. the type typically supported by the national enterprise agency, Enterprise Ireland). Findings revealed that, in some cases, the women entrepreneurs did not meet the funding eligibility criteria for either LEO or Enterprise Ireland. For example, their businesses were either considered too big for LEO or too small, not exportable or not sufficiently growth oriented for Enterprise Ireland, leaving the women unable to secure funding from either source.

Additional funding barriers identified by the women entrepreneurs in the study included a lack of clarity in the information provided in funding materials, not being in a position to provide the required matching funding, their business being too small for financial support, or not being export, manufacturing or growth oriented. However, there was clear consensus among the women interviewees that women-dedicated entrepreneurial networking initiatives, women-specific entrepreneurship training programmes and support programmes tied to funding provision were invaluable (e.g. New Frontiers). Unfortunately, with specific regard to the latter, not all start-up and early-stage funding in Ireland is packaged in this manner and currently, there is no state fund dedicated to women entrepreneurs.2

Conclusions

Start-up and early-stage women entrepreneurs in Ireland continue to face challenges in accessing financial capital. Several opportunities emerge for policy makers to enhance the funding landscape to account for the different challenges women entrepreneurs have to overcome in their entrepreneurial journey and the different types of businesses they develop as a result. These opportunities relate to bridging the perceived funding gap, offering more support for the sectors where women are more likely to start a business, organising awareness-raising funding sessions, and continuing to provide structured networking opportunities and entrepreneurship training programmes with embedded funding opportunities. A number of potential directions for policy development can be suggested, including creating a new women-only entrepreneurship funding scheme with mentoring and funding to encourage women entrepreneurs to transition from micro-enterprise to larger businesses, making funding support available to sectors in which women currently predominate (e.g. services, healthcare, retail, education) rather than restricting entrepreneurship funding to high tech, high growth, export oriented businesses, and offering financial mentoring, such as via pre-application workshops for public support and constructive and timely feedback to unsuccessful applications, for example showing them how to enhance their application for a subsequent funding round.

References

[1] DETE (2022), White Paper on Enterprise: 2022-2030, Department of Enterprise Trade and Employment, https://enterprise.gov.ie/en/publications/publication-files/white-paper-on-enterprise-2022-2030.pdf (accessed on 22 March 2024).

[10] DJEI (2014), National Policy Statement on Entrepreneurship in Ireland, Department of Jobs, Enterprise and Innovation, https://dbei.gov.ie/en/Publications/National-Policy-Statement-on-Entrepreneurship-in-Ireland-2014.html (accessed on 4 February 2024).

[3] Economic Times (2022), Ireland may be the place you’ve been looking for to start your new business, https://economictimes.indiatimes.com/nri/work/ireland-may-be-the-place-youve-been-looking-for-to-start-your-new-business/articleshow/92097026.cms (accessed on 22 March 2024).

[12] Enterprise Ireland (2020), Action Plan for Women in Business, https://www.enterprise-ireland.com/documents/action-plan-for-women-in-business-en-92306.pdf (accessed on 23 March 2024).

[2] EntrepreneursData.com (2024), Entrepreneurship in Ireland: Detailed overview, https://www.entrepreneursdata.com/entrepreneurship-in-ireland-overview/#:~:text=Ireland's%20supportive%20ecosystem%20is%20influenced,expand%20and%20operate%20in%20Ireland (accessed on 22 March 2024).

[6] European Commission (2024), Economy and Finance: Economic Forecast for Ireland, https://economy finance.ec.europa.eu/economic-surveillance-eu-economies/ireland/economic-forecast-ireland_en (accessed on 3 July 2024).

[7] GEM (2022), GEM Global Report (2021/22): Opportunity Amid Disruption, https://www.gemconsortium.org/file/open?fileId=50900 (accessed on 20 January 2024).

[14] Henry, C. (2024), “Are entrepreneurship policies really benefiting women entrepreneurs?”, Entrepreneurship Policy and Practice Insights, Vol. 2/2, pp. 1-7, https://isbe.org.uk/entrepreneurship-policy-and-practice-insights/ (accessed on 23 March 2024).

[4] Higher Education Authority (2023), Graduate Outcomes Survey: Class of 2022, https://hea.ie/2023/11/17/graduate-outcomes-survey-class-of-2022/ (accessed on 3 July 2024).

[13] Killeen, R. (2022), “How female entrepreneurs can access resources and financial support to get ahead in business”, Sage Advice, https://www.sage.com/en-ie/blog/female-entrepreneur-resources-financial-support/#barriers-anchor-link (accessed on 20 January 2024).

[5] OECD (2023), Joining Forces for Gender Equality: What is Holding us Back?, OECD Publishing, Paris, https://doi.org/10.1787/67d48024-en.

[11] OECD (2021), Entrepreneurship Policies through a Gender Lens, OECD Studies on SMEs and Entrepreneurship, OECD Publishing, Paris, https://doi.org/10.1787/71c8f9c9-en.

[16] OECD (2019), SME and Entrepreneurship Policy in Ireland, OECD Studies on SMEs and Entrepreneurship, OECD Publishing, Paris, https://doi.org/10.1787/e726f46d-en.

[15] OECD (2016), Supporting Women Entrepreneurs in Ireland: Rapid Policy Assessments of Inclusive Entrepreneurship Policies and Programmes, https://www.oecd.org/ireland/RPA-Ireland-women-FINAL.pdf (accessed on 20 January 2024).

[9] OECD/European Commission (2023), The Missing Entrepreneurs 2023: Policies for Inclusive Entrepreneurship and Self-Employment, OECD Publishing, Paris, https://doi.org/10.1787/230efc78-en.

[17] Ogunjemilusi, K. (forthcoming), Women entrepreneurs and access to finance in Ireland: An ecosystems approach, Dundalk Institute of Technology (DkIT), Ireland.

[8] TechCentral.ie (2022), Half of Irish women believe they the necessary skills to start a business, https://www.techcentral.ie/half-of-irish-women-believe-they-have-the-necessary-skills-to-start-a-business/ (accessed on 20 March 2024).

Notes

← 1.  Brexit, because of the United Kingdom’s decision to leave the European Union (EU), has positioned Ireland as the most westerly, English speaking EU country, making it an ideal location for European companies seeking to export to the United States, and US-based companies seeking a gateway to Europe.

← 2.  Previously, one of Enterprise Ireland’s “Competitive Start Funds” was dedicated to women entrepreneurs. This initiative was discontinued in 2022 and replaced with the Pre-Seed Start Fund (PSSF) launched in 2022 which is not a gender specific fund.