Invest NI puts up £2.6m for start-up scheme which is open to foreign firms
The job creation agency Invest NI is facing questions over a £2.6m training programme for business start-ups that include companies from outside Northern Ireland.
Almost 300 applications for Start Planet NI have flooded in from 45 countries worldwide, including Nigeria, Chile, Guatemala, Philippines, Estonia, El Salvador, Vietnam, Russia and France.
Based in Belfast city centre, Start Planet is a three-month 'boot camp' for entrepreneurs with technology-based ideas, such as new software or mobile apps. Their business 'heroes' are tech success stories such as Facebook, WhatsApp and Airbnb.
The project - similar to hundreds of others across the world - was launched last month from new premises in Donegall Street. The building is being renovated and will eventually house 10 teams - five from Northern Ireland and five from overseas. All are entitled to Invest NI funding, and will pitch for a £2.4m pot of private investment, too.
Each company will receive 'seed funding' of at least £15,000.
In return, they will be expected to release 8% equity in their firms. Some of this money will go into a central fund to be distributed among all the participating teams.
However, the companies will not be obliged to set up their businesses in Northern Ireland at the end of the three-month "accelerator" programme.
But Patsy McGlone MLA (right), chairman of the Assembly's Enterprise Committee, said he intended to question Invest NI about the use of public money to support overseas firms. He said: "I would like to find out how the local economy will benefit from that investment. As chair of the Enterprise, Trade and Investment Committee, I'll be looking to hear from Invest NI as to how the local economy will improve through investment in some individuals who may likely come, make best use of the money and then leave.
"There appears to be no guarantee that they will locate here and provide local employment as they grow.
"Indeed, some of these start-ups will likely be coming from countries with strong economies and high levels of government support for companies, so they could obtain funding and training at home."
In a statement Invest NI said: "The accelerator concept is one that exists in several countries and is known to attract high growth start-ups. The approach is to provide entrepreneurs with support to accelerate the growth of their business through mentoring and funding.
"This Northern Ireland accelerator programme is co-funded by Invest NI and the private sector, with investors offering funding support in exchange for equity in a business.
"The accelerator concept involves maximising potential for growth and economic development from very early stage businesses that have exceptionally high growth potential and can move straight to selling in global markets. It is the aim of the programme to support entrepreneurs to locate and establish their business in Northern Ireland - it is therefore seen as another channel for developing inward investment.
"Invest NI's Propel Programme operates a similar model, but focuses principally on NI indigenous start-ups."
A spokesman for Start Planet said: "Flights and accommodation are not paid for additionally. Any costs associated with relocating will have to be covered within the seed funding that the overseas company receives. The companies will, however, get support and advice in securing accommodation."
Apart from financial support, the start-up teams - each up to four people - will receive "intensive" mentoring from business experts. The 10 companies will also have the option to use the office in Belfast for a further six months free of charge. In addition to the Invest NI funding, there is also a £2.4m fund of private funding from a group of investors.
The Start Planet spokesman said: "While there is no obligation for the companies to stay here, they will be strongly encouraged to do so. The offer of free use of the office for a further six months is attractive. Plus, they'll be able to pitch for private equity, much of which comes from investors who are either based in Northern Ireland or have strong links here."
He said that local entrepreneurs who complete the programme can choose to leave Northern Ireland and locate elsewhere, such as California's Silicon Valley which draws thousands of start-ups every year due its reputation as the tech capital of the world.