Perseverance will see technology sector thrive
As Europe and the world face into a rapidly changing and difficult economic environment, this year’s Deloitte Fast 50 suggests Ireland’s technology sector will meet the challenge with élan
Anyone hoping that the winding down of the Covid-19 pandemic would see a return to normality will have been disappointed by 2022 so far: war in Ukraine, rising inflation, skyrocketing energy prices, a precipitous drop in the euro against the dollar and growing fears of a Europe-wide recession.
Despite this, Irish tech businesses have continued to thrive, just as they did throughout the pandemic, and this is borne witness by the Fast 50, Deloitte’s business awards programme measuring and rewarding rapid revenue growth by technology businesses.
Part of the reason for this is that Irish technology businesses are engaged in cutting edge areas. Indeed, previous winners run the gamut of high growth sectors, such as LetsGetChecked in the biomedical space who won in 2021, and artificial intelligence developer Everseen, who took the top spot in 2020.
Programme leader David Shanahan, tax partner at Deloitte, has returned to the helm for the fifth year. The contenders, whose activity in 2021 is being ranked, demonstrate that growth can be had even in difficult circumstances, he said.
“Domestic tech is still performing very strongly, and the overall trajectory is upwards. There are headwinds, but we see the general trend as positive”.
Another factor in continued growth is that Irish businesses are looking overseas.
“When you look at a lot of these companies, they're not companies targeting Ireland. They got their start here and they’re based here, but their key markets are elsewhere,” said Shanahan.
Indeed, given Ireland’s low population it makes sense for Irish businesses to look abroad for expansion, but in recent years the Fast 50 companies have demonstrated a tendency to expand beyond the obvious traditional market of Britain, with the US, Europe and, in some cases, Asia and Australia being key markets. This not only allows them to address a wider public, but also to diversify operations.
“Traditionally, that might have looked first to Britain but more and more they are looking at the US in particular, generating a significant proportion of their revenue from the US at a really early stage of their operation,” said Shanahan.
New ideas for a new world
As the 2022 awards measure activity in 2021 a lingering pandemic effect is likely to be observed.
“Certainly, there have been companies born during Covid who have been able to accelerate through that period whereas others have really struggled, particularly those related to hospitality and tourism, but we should see a bounce back from those,” Shanahan said.
The pandemic era has driven other changes that need to be considered, however, both at a business and a government level, said Shanahan.
“I think as a country, given the high rates of personal tax, we need to look at talent and how we treat share rewards to attract talent,” he said.
“The taxation of shares for indigenous technology companies in Ireland is not competitive compared to other countries. The KEEP scheme for example is not sufficient as it is currently structured. With engineers and developers in great demand, and remote working the norm, it’s important to consider that you're competing internationally for talent”.
Nevertheless, Irish businesses continue to draw investment, both internationally and domestically.
“Private equity has been an active investor in the tech sector, making growth funding available and so enabling promising businesses to scale up,” says Jan Fitzell, financial advisory partner, Deloitte Ireland.
“I think there has been a notable increase in funding activity within the indigenous tech sector in recent years. We need to continue to encourage early-stage investment through taxation incentives for entrepreneurs and founders. On the supply side we have seen a growth in the number of domestic funds, who are willing to back growing businesses as well as UK and US mid-market private equity funds coming in which has also helped. That availability of capital is really important.” said Fitzell.
Overall, despite any lingering effect of the pandemic and possible impact of inflation, Shanahan said that Irish tech has already performed extremely well and there is every reason to believe it will continue to do so.
“I think there's a lot of positivity in the sector. LetsGetChecked and Flipdish, for instance, achieved unicorn status; I'd expect to see more unicorns in the near future”.
Deloitte Technology Fast 50 Awards: the search begins
Now in its 23rd year, this leading awards programme recognises Ireland's fastest growing technology companies. The programme is a ranking of the country’s 50 fastest growing technology companies based on revenue growth over the last four years. To enter the Fast 50 Awards, companies must meet the criteria listed on the website, Fast50.ie, where applications can be submitted.
Deloitte 2022 Patron Award Categories
The awards programme will include several award categories in addition to the overall ranking:
1. Innovative New Technology Award in association with Google
This award is for a company that has created or introduced a new or innovative product/service to international markets that has helped grow their business over the last four years.
2. Impact Award in association with Meta
This award is for a company that has made a significant impact within the current year.
3. Women in Technology Advocate Award in association with Indeed.
This award will be given to an individual who has demonstrated through their actions that they are an advocate for increasing participation by and promotion of women in the technology sector.
4. Scale Up Award in association with Scale Ireland
This award is for a company that has demonstrated an impressive ability to scale up/expand overseas over the last four years.
Deloitte will also be acknowledging the programme's long list of alumni in the Alumni Award category. Companies do not need to enter this category but will be put forward based on their association with the Fast 50 Awards over the last number of years.
Full details can be found at www.fast50.ie