Irish businesses raised €285m from investors in 2013, up 6pc on the previous year when €269m was raised, according to the annual Irish Venture Capital Association VenturePulse survey.
The IVCA VenturePulse survey shows that Irish companies raised €284.9m from investors in 2013, despite the continuing global credit crunch.
Over 95pc of the funds in 2013 were raised by knowledge based companies covering software, medical devices, pharma and biotech.
Total seed funds raised in 2013 is €51.6m (18pc of total funds raised). This compares to €53.7m (20pc of total funds raised) in 2012.
“Venture capital is playing a vital role in fuelling the growth of Ireland’s indigenous technology sector,” commented Mark Horgan, chairman, IVCA. “VC backed companies tend to grow faster, employ more graduates and generate higher levels of exports than other indigenous SMEs.”
Warning – activity levels starting to slow
However, Stephen Keogh, a corporate partner in William Fry, which acted as legal adviser in over 40 of the funding rounds during the year, expressed concern that activity levels were beginning to slow.
“Irish VC firms are entering the end of the investment term within their existing funds. New capital will need to be raised from the private sector to fund SMEs into the future.”
Keogh added that Irish pension funds, which are valued at over €80 billion, should consider venture capital investment as a small part of a diversified investment strategy.
“Because of low returns from cash and bonds, pension funds are seeking alternative investments. Right now, as an asset class, venture capital is offering a good investment opportunity. IPOs are on the increase and exits are back on the agenda with Tier 1 global tech firms willing to spend their cash on acquiring VC backed tech companies.”
Local lead investor for international syndicates
Regina Breheny, director general, IVCA added that the Irish venture capital community continues to be the main source of funding for Irish innovative SMEs both through direct investment and as the local lead investor for international syndicates.
“In 2013 funds raised from international players was €119m, an increase of 22pc on 2012. Since the onset of the credit crunch in 2008, over €650m of international funds has been leveraged by Irish VCs into indigenous SMEs.”
She added that first round funding was 18pc of funds raised compared to 20pc in 2012. “Seed funds supported by the banking sector and EI’s Seed & Venture Capital Programme of 2006-2012 are close to being fully invested. These funds will need to be renewed if entrepreneurs are to be supported as actively as in the last five years.”
Venture capitalist image via Shutterstock
