Days of VC mega
deals are back

8 Apr 2005

Large funding deals for tech firms are firmly back on the table a survey from corporate finance house Ion Equity suggests.

Venture capital (VC) investment in Irish companies increased dramatically in the first quarter of 2005, with €75.4m invested more than twice the amount in the previous quarter, the quarterly Techpulse survey from Ion Equity shows. The first-quarter investment was almost half the total raised in the full-year 2004.

Three Irish companies – Corvil, Aepona and Irish Broadband – each raised more than €15m in VC funding in the first quarter of 2005 while only one company managed to raise more than €15m in the full-year 2004.

In total, 12 companies raised funds in the first quarter, more than in any quarter since 2003, while the average deal size of €6.3m was 35pc up on 2004.

The research also shows the involvement of international investors in the Irish VC market becoming more pronounced with Intel Capital, Apax Partners, Cisco Systems, Amadeus Capital Partners and Polaris Ventures all involved in Irish investments in the first quarter of 2005.

The most active Irish investors in the quarter were ACT Venture Capital and Trinity Venture Capital while National Toll Roads and Kilsaran Concrete Products were involved in the single biggest deal – the €18m invested in Irish Broadband.

Ion Equity director Ulric Kenny said that the move towards larger VC deals was likely to continue. “We are aware of a number of Irish companies that will shortly announce significant funding rounds. The market continues to be strong and we expect another good period for fundraising in the second quarter.

“It’s also encouraging to see the trend towards Irish companies receiving greater levels of investment. It helps level the playing field against US competitors that often receive US$50m or US$100m in VC backing,” Kenny added.

“The fundraising market for quality Irish companies is very strong and significant competitive interest is driving some very strong valuations and keen funding terms. Venture capitalists are more active than they have been since 2000 and are keen to deploy their capital, particularly after their low levels of investment activity over the past three years.”

Internationally, venture capitalists are becoming much more active and are aggressively pursuing investment across borders. Some Irish venture capitalists are also prepared to invest overseas in pursuit of good opportunities. In the first quarter of 2005, ACT Venture Capital led one of the biggest funding rounds in the UK – a US$24m investment in semiconductor company Frontier Silicon.

By Brian Skelly