Ireland: technology rules

Irish venture capital firms will require significant funding in 2006 if the level of investment in Irish industry is to continue to develop, according to the findings of the Irish Venture Capital Association Annual Review.

The amount raised in 2004 by Irish VCs was E47m compared with €60m in 2003 based on figures compiled by PricewaterhouseCoopers. The last significant fund raising by Irish VCs took place in 2001/2002 when E411m was raised over the two-year period.

Desmond Fahey, new chairman of the Irish Venture Capital Association, said: “We estimate that at the end of 2004 we have enough capital to service investment needs over the following 12 to 18 months. But the implication of this is that Irish VCs will require significant funding in 2006 if the venture capital sector is to continue to develop and support Irish entrepreneurs and industry.”On a positive note, divestments by Irish venture capital companies reached record levels in 2004 at E191m. This compares to E58m in 2003 and E32m in 2002. Ninety-three per cent of divestments were by way of trade sales, public offerings, debt repayment and sales to other investors, and 7% of divestments were accounted for by write offs.

The level of investment in 2004 by Irish VCs into Irish companies reached E61m. This compares with E255m in 2003. While the 2003 figure accounted for E176m of buyouts, the association considers the investment levels in 2004 disappointing. The Irish technology sector continues to demonstrate vibrancy with 87% of investment in 2004 being made in tech firms. Fahey said: “An encouraging sectoral shift may be emerging with an increase in the investment into the healthcare sector reflecting the coming on stream and the beginning of commercialisation of projects funded by the Government through its various research initiatives.”International VCs invested E113m in 2004 in Irish based companies. “This reflects the strong performance of Irish companies in attracting international investors particularly in their later investment rounds,” said Fahey.