The Government will stake 37.5 million euro from state pension reserves on a technology investment company.
Polaris Venture Partners is a US-based firm which gives cash to start-ups in the hope they grow into successful businesses and give a good return on the investment.
As part of the deal, the venture capitalists will set up an incubator centre in Dublin for up to 50 budding entrepreneurs to kick-start their enterprises in shared, open office space.
It will be the fourth so-called Polaris Dogpatch Lab - with three already in Cambridge, Massachusetts, New York and San Francisco - and the first outside the US.
On its website, Dogpatch Labs says it is "sorta like frat houses for geeks" that offer desk space, internet connection, coffee and lunch to aspiring entrepreneurs.
Polaris Venture Partners - which has offices in Boston and Seattle - has 2.2 billion euro invested in more than 100 companies in the technology, healthcare, manufacturing, media, communications and business services sectors.
The Government is taking money from the National Pension Reserve Fund and ploughing it into Polaris though a scheme aimed at attracting international venture capital fund managers to Ireland.
Polaris said its Dogpatch Labs in the US have a fresh intake of entrepreneurs and start-ups every six months.
Terry McGuire, managing partner at Polaris, said the start-up centres have been highly successful.
"We are excited to be taking that model to Ireland, which has already attracted the likes of Google, Facebook and LinkedIn, and are hopeful that, in partnership with Innovation Fund Ireland, Dogpatch Dublin will emerge as a key hub for entrepreneurs across Europe," he said.