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Ireland at the forefront for start-up financing

According to a new report by the Association of Financial Markets in Europe (AFME), Ireland is one of the best places in Europe for young companies to invest, gain a foothold in the stock market and access global capital.

The report points out that Ireland is the best-ranked country to start start-ups in the European Union and the UK and offers risk capital in the country to non-listed companies.

According to the report, Ireland had a risk capital investment of 300 million and an SME loan of 1.6 billion in the first half of 2020.

However, the report warns that SMEs are over-reliant on bank finance. It is estimated that this will reduce funding from risk capital investment by a ratio of 38 to 1.

Meanwhile, EU bank lending to SMEs reached 573 billion in the first half of this year, compared to 14.1 billion from venture capital, private equity, business angels and crowdfunding.

AFME chief executive Adam Farkas said the significant increase in bank lending was evidence that businesses in Europe were becoming increasingly dependent on bank lending.

At the same time, the report found that market financing in Ireland remained stable despite the Covid crisis. However, the report says that Europe’s equity market is inadequate, forcing more SMEs to take out bank loans, which limits the opportunities for companies.

It is estimated that Ireland’s capital investment rankings have been helped by a nine per cent decline in bank lending to SMEs in the first half of the year, compared to an increase in other capital deposits.

In contrast, bank lending to small businesses grew by an average of 19 percent in other parts of the European Union during the same period.

Meanwhile, the report criticized Ireland for not delivering sustainable securities this year. Ireland ranks last out of 28 countries surveyed in this regard.

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