It was never going to be easy emerging from the wreckage of Media Lab Europe (MLE), the MIT-backed blue-sky technology research centre that closed its operation in Dublin's Digital Hub in 2005 at a loss of €50m. MLE dealt a serious blow to the credibility of the Digital Hub at a time when the economy was roaring ahead and every idea in town seemed to be an earner.

How much more difficult to run a commercially-focused research centre in the teeth of the worst recession in the history of the state?

Ben Hurley, chief executive of the National Digital Research Centre, is the lucky man with that particular job. The former head of communications technology firm Innovada was brought in to the NDRC at the greenfield stage in 2007, after the centre's two-year genesis in the Department of Energy, Communications and Natural Resources, to help bridge the gap between the pure research underwritten by Science Foundation Ireland and the more commercially advanced projects overseen by Enterprise Ireland.

"Ireland has had very good strategic investment in research through SFI and also good enterprise support on the industry side of things," he says. "But a gap is evident in getting funding from the research lab prototype into the commercial space. There was no specific funding in that area.

"SFI funds and develops creativity and discovery of the research base. But you get to a point where you have to make research results into commercially investable opportunities. We come in at the late-stage primary research stage, but before it's a guaranteed proposition that could get funding from a seed investor."

The NDRC is backed by a €25m concessionary agreement from the department which Hurley has been drawing down to fund various projects over the past year-and-a-half since the operation went live. He has just concluded the first phase, which involved €10m of the fund leveraged with an additional €2m of money from 14 commercial partners who participate in what Hurley calls "unincorporated joint ventures". That is now a portfolio of 17 "collaborative translational research projects" where NDRC acts as a "nexus" between researchers, venture capital and industry.

"One of the secrets to the NDRC's success is its nexus positioning," says Hurley. "Academics, industry and venture capital – those are the three critical players we seek to bring together. If we migrate to one of those corners we're just another research entity, company or venture capitalist. It means you're competing with the guys you're trying to bring into the process."

NDRC operates in four research areas: healthcare, education, gaming and environmental technology. It is now entering its second phase of funding with two new programmes, Catalyser and Launchpad. Catalyser gives investment of €25,000 to late-stage applied research projects for three months to test commercial viability. Launchpad is the next level: €50,000 for up to six months to bring the project forward to start testing the market.

These seem like small bits of money, but they can be crucial in getting a project from a risky idea to a proposition that outside investors can cope with.

"It's all about reducing risk," says Hurley. "Investors will invest in risk up to a certain point, but a lot of research that SFI would support is too risky for private investors. Investors will come in when they can understand the risk. But there's a bit in the middle where risk is not understood, but it's not pure research either."

This, Hurley says, is why the state has to be involved at the funding end and why, even though private money is eventually supposed to come in and take the NDRC's collaborative ventures onward, the state needs to stay involved in the long term.

"We're building up an enterprise that can do this on an ongoing basis," Hurley says. "Should it deliver on the results it is working towards, the smart thing is to follow that investment. As the NDRC builds its credibility we'll be seeking other sources of investment from external parties. It's going to require continued investment to get to that stage."

Hurley says the contribution levels from venture capital and industry are "building all the time" as the NDRC builds credibility and reputation. The NDRC has already produced successful digital projects including the award-winning Cloudsplit, which provides a cost-control solution for cloud computing; Point The Way, an advanced GPS navigation system for the visually impaired; and Sokohealth, an innovative healthcare marketplace focused on specific health procedures in the US.

Hurley says companies such as these are in a "transitional phase" where they are leaving the NDRC and seeking external investment.

"When they achieve that there is going to be a big uptick in reputation that will allow us to go even further," he says.

The problem he faces, though, is that the NDRC idea emerged in the late stage of the Celtic Tiger, but came to fruition at a time of profound panic during the recession. A lot of people will have to hold their nerve for the concept to succeed. Hurley will have to persuade his benefactors in government that, even though it might not pay off until the next generation – not the next election cycle – it's still worth doing.

"You're unlikely within the term of concessionary agreement to see the full impact," says Hurley. "The time frame is 10 to 15 years. We want to create companies of capital value that are going to bring wealth into this country but we need indicators. Follow-on investment is going to be the next stage. You can impute a value from follow-on investment. An investment next year of a few hundred thousand could mean down the road a company of several million which is going to drive jobs."

But he is adamant that if the NDRC performs its derisking role in the marketplace – with crucial state backing – it can bring about the systemic capability in the Irish economy that can be a long-term basis for economic success.

"We've had some good success in the tech sector and we can do a lot more," he says. "Our assets are real, but we're not Germany, we're not the UK, we're not Silicon Valley. We're not so much trying to replicate that as to do something that's relevant in the Irish context to achieve the same effect.

"Create the market capital, build that commercial acumen, help indigenous companies connect with the research base, and by virtue of doing this and creating a collaborative infrastructure, you've made an important contribution to the systemic capability of the country."

Curriculum Vitae

Ben Hurley

Age: 44

Education: Trinity College, Dublin (BA Comp Sci, MSc Comp Sci) and UCD (MBA)

Career: Serial entrepreneur; previously served on the boards of several technology companies, including Innovada, and as chairman of the Wireless Sensor Network Industry Group.