Enterprise Ireland’s Pre-Seed Start Fund

Practical matters, rather than legal issues, can often cause unexpected but entirely preventable delays in investment. First-time founders and clients of Enterprise Ireland face a particularly steep learning curve. It can be hard to know what needs to be prioritised. In this article, our Fast Growth Companies team provides seven practical tips for founders seeking Pre-Seed Start Fund (PSSF) investment from Enterprise Ireland.

The Pre-Seed Start Fund (PSSF) is one of Enterprise Ireland’s flagship funding programmes. It provides early-stage start-ups with investment of €50,000 or €100,000, along with mentoring and market research access.

The legal process can be simple but practical issues often cause unexpected but preventable delays. Here are seven things you need to know, and prepare, to avoid unnecessary delays completing your PSSF investment.

1. Secure €5,000 of co-investment

You need €5,000 of co-investment for every €50,000 to be invested by Enterprise Ireland.

This co-investment can include any type of equity investment. While Enterprise Ireland allows the investment to come from angel investors or venture capital firms, in our experience, the founder(s) usually make the co-investment.

You should be aware that R&D grants, LEO supports and shareholder or director loans are not considered equity investments in this context.

2. Arrange a matching funds letter

You need a third party such as an accountant or solicitor to issue a letter confirming that this co-investment in the company has been made. This is referred to as the “matching funds letter”.

The company’s external accountant usually provides this letter.

3. Prepare shareholders to sign

Ensure that all of your shareholders are available to sign documents. E-signature is generally acceptable.

There are two key legal documents for the PSSF investment: (1) an investment agreement, and (2) a convertible loan note instrument. All shareholders must sign the investment agreement, but only company directors need to execute the convertible loan note instrument.

Be aware that Enterprise Ireland does not engage in negotiation or allow any changes to be made to the key documents. As a result, your solicitor will only be able to insert standard company information where relevant. PSSF is a “take it or leave it” deal.

4. Get a company seal

You will need a company seal.

While an e-signature is acceptable for most of the legal documents mentioned above, Enterprise Ireland requires you to print and execute a loan note certificate using your company’s seal.

A company seal is a pliers-like device that physically impresses the name of your company into the paper, it is not an ink stamp. You will need this more often than you think for important legal documents, such as share certificates.

There are several online suppliers for company seals.

5. Ensure you have tax clearance

You will need a tax reference number (TRN) and a tax clearance access number (TCAN).

Enterprise Ireland needs to confirm that your company’s tax affairs are in order. If your business applies for electronic tax clearance and is issued with an electronic Tax Clearance Certificate, it means tax affairs of the business are in order. Revenue will then issue you with a TCAN which can be given to any other person who needs to check your company’s tax clearance status.

A tax clearance certificate can be generated using the Revenue Online Service.

6. Confirm no double funding

You will need to confirm to Enterprise Ireland that your business has not sought, and will not seek in the future, aid from any other Irish state agency to cover the same expenditure costs being funded by the PSSF investment.

7. Get a redacted company bank statement

You will need a bank account in the name of the company, not in the name of the founders. You must provide Enterprise Ireland with a bank statement with the IBAN clearly visible. Enterprise Ireland requires this as an anti-fraud security measure.

You can redact the account balance and transaction history. Enterprise Ireland does not need that information, just remember to ensure your IBAN is visible.

Completion

Once Enterprise Ireland has everything it needs, your solicitor acting on your behalf and Enterprise Ireland will confirm completion of the investment. You can then expect to receive the PSSF money within 10 working days.

Using our checklist above, you can minimise unnecessary delays completing your PSSF investment, allowing you to focus your attention on growing your business.

Our Fast Growth Companies team has a lot of experience helping clients with their PSSF investment. If you are an early-stage startup in Ireland with global ambitions and are looking for assistance with your PSSF investment, please get in touch with a member of our team.

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The content of this article is provided for information purposes only and does not constitute legal or other advice.