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04 Oct, 2022

David Leydon talks to Leo Clancy, CEO of Enterprise Ireland on Ireland's contribution to global food supply

Leo Clancy is the CEO of Enterprise Ireland, the State agency that helps Irish companies to start, grow, innovate and win export sales in global markets. Before being appointed to the role in May of 2021, he led the Technology, Consumer and Business Services sector as well as IT, Marketing Communications and Corporate Services at the IDA Ireland, and was a member of the Executive Management team. In this discussion with ifac’s David Leydon, he covers a wide range of topics of interest to food business owners and the broader agritech sector.

When speaking with Leo, you get a strong sense of a person who is excited about what he is doing. He starts our conversation talking about the ambition of Enterprise Ireland (EI) and the role that the organisation plays for food businesses and agribusinesses in Ireland, pointing out that these two sectors represent nearly half the export potential that EI is involved with. “These sectors are hugely important. They are a very big employer, and a mainstay of many rural communities throughout Ireland.”

The future of food

Touching on the food sector first, Leo highlights the role Ireland has globally as a major food producer. “In terms of our ambition for the sector, we need to remind ourselves that we operate in a global economy which is facing significant food shortages. As a very big food producer, Ireland has a major role to play in contributing to global food supply. I believe that we can continue to up our output levels in a sustainable way. We already contribute hugely to global nutrition at a very high standard. We can continue to grow our food and agri output sustainably.”

Under Food Vision 2030, there are clear environmental targets to be met but Leo also notes the commercial opportunities for businesses as part of this strategy. “Food Vision 2030 sets out where we’re heading as a nation. I believe that as methods become more sustainable, what we do today will also become more sustainable. We also need to continue to journey towards adding more value – and this will be an interesting part of our journey towards 2030. Ultimately, adding value is the best way of commanding more margin.”

“We’ve got steady numbers signing up for our high-potential startup programme, but we’re confident we can do more here in terms of numbers. We’ve got a tremendous amount of food expertise out there, but I suppose the problem with food – from a venture point of view is that there’s a lower return and margins, lower scaling and greater investment needed. But we can’t accept this as being written in stone - we have to remember that the likes of Glanbia and Kerry were small companies once!”

In terms of what particular aspect of food development most excites Leo, the answer is simple – it’s innovation. “We obviously have a number of very successful companies who’ve made their fortune based on innovation, but there’s still an awful lot of potential left. The notion of sustainable green food products is very exciting.”

“The flip side of this is the challenge posed by global warming. As food becomes scarcer, Ireland’s responsibility in the area of global nutrition will become even more acute. As a country, we’ve always taken our social global responsibilities seriously, and I’m expecting this to continue in the area of food production.”

Supporting the Agritech ecosystem

Enterprise Ireland are backing the agritech sector. They have taken considerable measures recently to enhance the ecosystem. “On the agritech side, there’s definitely a huge scope for high-potential startups. There’s more to do in this area, and it has probably been left outside of our standard tech system to some extent. Going forward, I think software and smart hardware will be very important. It doesn’t always have to be about hardware sales, and if you can sell ‘as a service’, it allows you to scale up very fast.”

EI have recognised that integration with other sectors is key to growing agritech and they are taking steps to facilitate this collaboration. “I think one of the things we need to focus on is making greater connections between agritech companies and the wider tech ecosystem. And one of the ways we’ll make this happen is simply focusing on it more. In that respect, I think we sent out a big signal in the appointment of James Maloney. He’s our Senior Development Adviser, Agritech, Climate and Sustainability and his appointment certainly made people look again at what we’re up to.”

“I think one of the things we need to focus on is making greater connections between agritech companies and the wider tech ecosystem. And one of the ways we’ll make this happen is simply focusing on it more.”

“We’ve already made a big investment in agritech, notably through things like the CeADAR Centre – which is the National Centre for Applied Data Analytics & Machine Intelligence. This can be availed of by the agritech sector as quickly as any other. There’s nothing particularly unique about agritech, it’s simply another technology.”

Leo’s view is that agritech can help the wider agricultural sector on the journey to reducing emissions by 25%. “It needs to be applied to more and more elements of our traditional methods, and this will be vital if we’re to achieve our target of 25% reduction in emissions – along with regenerative agricultural practices and improved management. We can certainly have an impact, but we need buy-in.”

Time to market can be an issue for agritech products and this can have an impact on accessing capital, in particular venture capital where investors are looking for returns in a specific timeframe. “One of the things that we need to be aware of is the length of time that it takes a typical agritech product to reach viability. It can easily take five years to go from concept to getting Irish farmers to buy it – and then scaling up to take on the global market. In terms of funding such development, venture capital doesn’t really suit agritech. They want quicker returns than agritech tends to offer.”

Leo adds that any capital that EI invest is patient capital, and very much geared towards the long game.

Key emerging markets

In terms of what markets excite Leo the most, his answer is immediate. “We’ve still got a long way to go in Europe. Agritech has targeted the US and UK very heavily, but I think there’s a lot of scope still in Europe. Then, at the other end of the scale, the potential from Africa is huge for food and agritech. By 2050, the population may nearly double– that’s a huge opportunity for Irish agritech companies.”

“There are so many efficiencies to be achieved in Africa. In terms of land use the opportunities are endless, and I think this is one area where Irish agritech companies have the potential to take a lead.”

A focus on Enterprise Ireland

Getting back to the ambition of the Enterprise Ireland, one of the agenda items that occupies a lot of time for Leo and his team is how to better support and provide the right business tools for the SME sector in Ireland.

“We obviously have a strong partnership with the Local Enterprise Offices, who offer an awful lot in terms of training support, and the ETB’s also play a part, but specialist knowledge in areas such as finance or talent management are an absolute requirement for successful SMEs.”

In terms of equity investment, Leo points out that there are three key things that Enterprise Ireland looks to, “First of all, there’s the business plan - where is the company headed? Secondly, there’s the founding team – and the level of expertise they bring to the table. And thirdly, there’s the matching team – who else is investing and are they adding ‘smart money’ or just money? In terms of grants, the major criteria would be the economic return in terms of jobs, export and business benefits, along with the execution of the business plan.”

As to what advice he might give to companies approaching EI for assistance, Leo points to two key areas. “Firstly, there’s how well they present their case – and secondly, there’s the issue of how persistent they are. Remember that we are bound by legislation in terms of who we can support, which is mainly manufacturers or internationally traded services.”

“Obviously, it would be inappropriate for us to demand that a company is exporting on the day they come to us, but there has to be the belief that they will do so in the future. And this is where persistence comes into play – can companies convince us that they will make it on the global stage? We’re not in the business of creating businesses that will compete with each other on the local market.”

Leo Clancy on...

Brexit and the Protocol

“Brexit continues to be extremely troubling and will be for years – not months. We still don’t have a clear picture of how it will play out. In terms of the protocol, I think Irish producers have done a great job, and EI – before my time at the helm – also did a magnificent job in helping them gear up for the challenges ahead. Our producers are confident that they can deal with change. The problems tend to be with issues like veterinary inspection - but overall, we’ve done very well in facing up to things like customs and other problems.”

Enterprise Ireland’s approach to risk

“People say that we’re risk averse, but when you compare us to many private sector funders, we’re a lot more risk tolerant. That said, we have an obligation to the public purse and value for money is of primary importance to us. In the last year alone, we returned €100 million to the Exchequer.”

The role of private equity in Ireland

“I think it’s been really good. I’ve seen some great examples of creating opportunities that simply wouldn’t have existed without private equity involvement. Our ambition is that the Irish-owned enterprise sector will be significantly bigger in ten years’ time.”

The Enterprise Ireland Global Network

“In terms of our plans for the global network, we’ll be adopting the status quo in the short term, but this is something that’s under constant review and we’ll ramp it up if and when the time is right.”

The impact of government climate change policy

“It’s a global inevitability that we’ll have to reduce our impact on our planet. The targets set will cause a lot of pain for many years to come, but in the longer term, I believe that it will be a very positive thing for industry. We spent a lot of time speculating about what our target would be, but now that we know, it’s time to get to grips with it. It means we will have a revolution in Ireland, and in the agri sector, agritech will have a big part to play in helping us reach our emissions targets.”

Willingness to support fossil fuel alternatives

“Wind, in particular, is a huge opportunity for Ireland – along with the hydrogen potential that comes with it. This could yet prove to be our next big ticket as a nation. We’ve a huge job to do in terms of infrastructure, but you can’t tackle that in one big bite. It’ll take time.”

Culture at Enterprise Ireland

“My philosophy for this organisation is that you never feel worse for saying something than for not saying it.”