Venture capital investment in Irish firms up 52pc

The Enterprise Ireland Seed & Venture Capital Report 2009 highlights a significant increase in seed and early stage funding for entrepreneurs and business start-ups.

Feargal Ó Móráin, director of Corporate and Investment Services at Enterprise Ireland, said that despite the difficult climate for business, Irish venture capital firms supported by Enterprise made 87 investments with a value of €52m in 2009, marking a 53pc increase on the value of investments in 2008.

The number of new companies invested in during the year, at 25, also represented a significant increase of 47pc on the previous year.

Another highlight of the year was the significant increase in seed funding made available to meet the urgent need for capital for entrepreneurs and early stage start-ups.

Increasing availability of seed capital

As part of the Government’s bank recapitalisation initiative, AIB expanded its seed and early stage fund while a new fund was launched by Bank of Ireland. This focus on increasing the availability of seed capital has continued in 2010 with the Government recently announcing the provision of a further €40m in seed capital funding from AIB and Bank of Ireland in the continuing context of bank recapitalisation.

“A robust and thriving indigenous venture capital industry is critical to encouraging entrepreneurs and companies to set up and grow their businesses,” Ó Móráin said.

“Enterprise Ireland is committed to working with the Government and our investment partners in ensuring that the critical need for start-up and growth capital is met.

“There were a number of very welcome developments in 2009. During the year, there was an increase of €49m in seed capital funding available to Irish companies, with the launch of the new €26m Bank of Ireland Seed & Early Stage Equity Fund and the €23m expansion to the AIB Seed & Early Stage Equity Fund.

“Another new fund launched in 2009 was the €75 million Seroba Kernel Life Sciences Fund II Limited Partnership Fund, one of the largest dedicated life science venture capital firms in Ireland and the UK.

“Over the past 16 years, the Government, through Enterprise Ireland, has committed approximately €320m, as a limited partner, in the majority of seed and venture capital funds that have emerged in Ireland. This includes investing in eight new VC funds under the current 2007-2012 Seed & Venture Capital Programme.

“The total amount of investment available to companies under the current programme reached €525m in 2009. And following the recent €40m increase in seed capital funding from the banks, the total amount of available seed capital for early stage Irish companies will be now €119m – this represents an unprecedented level of funding for the key start-up/early stage segment of Irish business.

“The investment pipeline for these funds remains strong, a very encouraging feature given the current difficult economic environment, and a further positive feature of the year was the continuing strong level of deal syndication between Irish and overseas VC funds,” he said.

Taoiseach launches Innovation Fund Ireland

In recent weeks, Innovation Fund Ireland – a major €500m venture capital fund created by the Irish Government – was launched in New York by Taoiseach Brian Cowen with the aim of attracting international venture capitalists to Ireland’s shores.

“The Government, through Enterprise Ireland, has leveraged venture capital to support scalable Irish businesses so that they can create high-quality jobs as our economy shifts into the recovery phase,” said the Minister for Enterprise, Trade and Innovation, Batt O'Keeffe TD.

“Enterprise Ireland has made an outstanding contribution to the development of venture capital in Ireland. The recent announcement by the Taoiseach of a €500m Innovation Fund will strengthen the agency's role in supporting enterprise development and job creation. The fund will transform our investor environment by creating top-tier international venture capital funds and networks in Ireland.

“Ireland has a strong technical human capital base, significant public investment in research and development and a high concentration of major enterprises which now must be translated into more home-grown success stories.

“To create a thriving high-value indigenous enterprise sector, we must expand the indigenous enterprise base and we can do that by enabling entrepreneurs to co-invest with the Government in high-potential start-ups that can create 'smart' jobs in key growth sectors of the economy."

Report highlights:

• In 2009, a total of 87 investments with a value of €52m were made by partnership funds supported under the Enterprise Ireland Seed and Venture Capital Programmes 2007-2012 and 2000-2006. This represents a 53pc increase on the value of funds invested in 2008, which was €34m.
• This brings to €512m the total invested, to end 2009, by Enterprise Ireland partnership funds in all three programmes (2007-2012, 2000-2006 and 1994-1999).
• In 2009, the total number of new companies invested in was up 47pc on the year 2008 (25 as against 17 in 2008).
• Two new funds successfully set up in 2009 – the Seroba Kernel Life Sciences Fund and the Bank of Ireland Seed & Early Stage Fund. One existing fund substantially increased in size – the AIB Seed Fund from €30m to €53m.
• The total amount of formal seed capital funding increased to €79m in 2009 up from €30m in 2008. 
• The total amount of investment available to companies under Enterprise Ireland’s 2007-2012 Seed & Venture Capital Programme reached €525m in 2009.

John Kennedy | |