I was talking to someone yesterday about innovation in the economy. The backdrop was the current motif of Europeans abandoning American produce as much as we can. But that Europe is so difficult to operate in that fairly sweeping changes need to happen. The crux of these changes allow the market to operate is one big market that anyone can access capital funding as well as customers. That's not easily possible today.

Ireland is awash with people a bit like me. Middle (or even high) income earners, who have collectively amassed the knowledge of several MBAs in a decade or so of working in hyper growth tech companies. Folks who know what it takes to build and scale software, hardware, teams, adopt new technologies and go to market to find customers, service their needs, etc. And yet, Ireland has a pathetically low startup success rate.

I would hypothesise that the reason our startups don't succeed is twofold: the only people starting new companies are young & who can take risks. The folks with that amassed institutional knowledge are afraid to take a risk because they need to pay the mortgage, feed the kids, etc. A startup, to them, represents an enormous drop in income. And the second is Europe is anti-competitive. If you found a company in Ireland, scale the product and find some customers, getting into the wider European economy is wrought with too much pain.

For what it's worth, Ireland is often touted as having a huge GDP. And it does, but that's distorted aggressively by multinational activities. GNI (gross national income) is about €270bn, which is almost half of GDP. And that's down over 70% since 2012, which is coincidentally when I started my first tech job in an American hypergrowth startup.

These stats suggest that enormous wealth is being generated in Ireland, but it's flowing away from the people and country itself.

In 2022, there were only 89 full 20-year term Irish patent applications filed. This is a dramatic decline from the beginning of the century when over 1,150 Irish patent applications were filed in 2001. Patent activity outside of Ireland can waver depending on the country, but for a nation rammed with tech and pharma workers as well as a young populace of idea-riddled students, less than 100 patents in a single year is insane. And keep in mind, 2022 was a year where most folks were sitting at home tinkering thanks to covid-era restrictions.

There was also a drop of 18% in new invention disclosures from Irish universities in 2022, and there were only 67 PCT applications filed from all Irish universities in total in 2022. The University of California filed over 550 PCT applications in 2022. That's one American university outpacing Ireland's entire third-level sector by eight to one.

2024 shows some improvement with a 31% increase in patent applications, rising from 589 in 2023 to 774 in 2024. But this growth is largely driven by foreign applicants using Ireland's favourable IP holding environment, not domestic invention. Ireland does rank eleventh in Europe for patent applications per million inhabitants, which sounds decent until you consider that Switzerland consistently tops this metric and Ireland's nominal IP activity is heavily skewed by foreign-owned entities.

The total spend on "innovation" in Ireland was €11.2 billion in 2022, an increase of 50.4% on the 2020 figure of €7.4 billion. That headline looks impressive until you look at who's doing it: Irish-owned enterprises accounted for only 22% of innovation expenditure in Ireland in 2022, while foreign-owned enterprises accounted for 78%, underpinning my prior points that the headlines can be misleading. We are not in a healthy environment for startup activity, innovations and transformations in the economy.

The European Innovation Scoreboard 2025 says R&D expenditure in the public sector remains very low at 16.7% of the EU average in 2025. Venture capital expenditures are also well below the EU average at 69.3% and have been on a downward trajectory since 2018, down 41.2%. Which emphasises my two points earlier. It's too risky to start a company (can't get the capital to live on a salary while investing in people, premises, etc.) while also not being able to access the market.

I love comparing ourselves to Norway, despite their investment posture being driven by natural resources. But they have a similar population, and similar density stats as Ireland. Norwegian public R&D expenditure was €670 per capita in 2023. As noted, Ireland's public R&D figure sits at roughly 16.7% of the EU average. Ireland, a country that supposedly has among the highest GDP per capita on earth is committing far less per citizen in government-backed research than the EU norm.

There is some good news though. We climbed to 18th place in WIPO's Global Innovation Index in 2025, jumping from 19th in 2024 and 23rd in 2022. Though in 2015, we ranked 8th. A decade of slippage followed by gradual recovery is not a story of an innovation powerhouse.

The detail within those rankings exposes the structural problem. Ireland stands out with the highest GDP per capita among EU27 Member States. But this figure is influenced by the activities of multinationals and does not necessarily reflect domestic living standards or productivity at the household level. Ireland performs well in institutional and business environment (top 10 globally), but ranks only 24th in human capital and research. A country with a world-class education system and a highly educated population underdelivering on the innovation that education should produce. In my opinion, anyway.

Our friends, the Swiss, held the number one position in the Global Innovation Index for six consecutive years. Norway, though not in the top 10, punches well above its weight specifically in researcher concentration and public R&D investment.

Startups and funding

Ireland's startup ecosystem ranks 16th worldwide in 2025, with Dublin leading nationally. Over the past decade, total startup investment in Ireland has surpassed $13.87 billion. However, the number of funding deals decreased by 23% between 2023 and 2024, even while total funding values rose. This tells us that there are fewer, later-stage deals rather than a broadening pipeline of new companies getting off the ground.

On a personal level, most of my network are in/around tech. Most folks I know have been in high tech, innovative environments in high growth companies for a decade-plus. I sit in the odd population of folks who earn enough to live comfortably, but cannot convert their stored-up RSUs or options into investment vehicles for their own ideas, or to invest in other startups as a bit of a retirement nest-egg. It's the dichotomy of being a Social Democrat, but needing Fine Gael to lower capital gains.

The only people I know in my network who are building a retirement nest egg with any extra funds are folks who bought into pubs or restaurants, ironically. They don't run the businesses, but those businesses represent their pension fund top-up.

Ireland has the talent pipeline, the tax receipts, the multinational infrastructure, and the physical and digital connectivity to be a genuine innovation hub. Instead, we've presided over a 20-year collapse in domestic patents, public R&D spending at a fraction of comparable economies, venture capital declining and a startup ecosystem where most funding flows to a handful of Dublin-based companies rather than a distributed national ecosystem. The country is an exceptional host for other nations' innovation. It has yet to become a serious creator of its own.

The foundations are there to become a true silicon valley of Europe, particularly in a new political paradigm. But we've decided to not pursue that economic reality.

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