Irish investment activity in 2001 was down on both 2000 and 1999 figures, according to the Irish Venture Capital Association. Investment for the year to 31 December totalled euro124 million compared to euro208 million in 2000 and euro178 million in 1999. However, the underlying trend is still upwards with investment in 2001 over 3 times the 1997 level when a mere euro39 million was invested. Over 500 companies have received in excess of euro600 million in venture capital funding since 1997.
Chairman of the IVCA Conor O’Connor explains the downturn: “The 1999 figure includes one transaction of €70 million which skews the aggregate. If one excludes this transaction, the underlying level in 1999 was €108 million. It is therefore clear that despite a significant drop on 2000, the overall trend is still upwards.” He added that while the operating environment internationally remains harsh, technology and the creation of economic return from it will remain a key driver for the economy.
The figures reveal that Ireland has proportionately the highest level of investment in the technology sector throughout Europe. Around €95 million was invested in high tech in 2001. While the aggregate figure is down on 2000, proportionately more venture capital investment went into technology in 2001 than in 2000. While the increase is small – 76.9 per cent in 2001 versus 74.5 per cent in 2000 – it is clear that in spite of the downturn significant amounts are still being committed to that sector.
O’Connor concluded: “The current volatility in capital markets poses challenges but given that IVCA members invest over the longer term I have no doubt that the Irish venture market place will continue to develop in the years ahead.”