In this paper we study the evolution of knowledge-based entrepreneurship in Wales and Ireland. We explore how industrial policy choices influenced the nature, extent and evolution of knowledge-based entrepreneurship. Ireland and Wales offer a ‘natural experiment’ for exploring the impact of policy on the emergence of knowledge-based entrepreneurship because they both face resource constraints in seeking to develop knowledge-based entrepreneurship. In particular both Ireland and Wales are characterised by weak knowledge creating institutions; by an absence of a strong indigenous industry base; and by relatively low levels of indigenous R&D activity. However, there are what appear to be important differences in the policies pursued to create new knowledge, particularly those related to the attraction of inward Foreign Direct Investment (FDI). We expect these differences to have impacted on the evolution of knowledge-based entrepreneurship.