Irish VC investment
levels fall in Q1

17 May 2006

The amount of capital invested in Irish companies by venture capitalists fell to €29.1m, compared with €31.3m in the previous quarter. IT is still the dominant sector attracting the lion’s share of investment.

According to the latest Ernst & Young quarterly venture capital report, IT attracted €28.1m of the €29.1m invested and accounted for six out of the seven deals.

The report says that the number of Irish deals completed increased from five in the fourth quarter in 2005 to seven deals in the latest quarter. During the first quarter last year some nine venture capital deals were completed.

“The strength of investment in the IT sector is continuing to account for the vast majority of deals in Ireland,” said Garry O’Rourke, senior manager at Ernst & Young.

“The biggest deal of Q1 2006 was wireless software company Anam Mobile, which raised a €14m corporate round in February. This deal reflects the current appetite amongst venture capital investors for the IT investment opportunities,” O’Rourke said.

According to the Ernst & Young report the focus of investment during the first quarter was on later-stage financing, accounting for four out of the seven deals and €26.8m of the €29.1m investment.

The company said this represents an increase in venture capitalists’ eyes of the importance of later-stage deals, compared with last year when later-stage deals represented two out of the five deals.

The number of first- and seed-round financing dropped from three deals in the first quarter of 2005, one the fourth quarter of last year to zero in the first quarter of this year. Financially, this represents a drop of €7.5m from Q1 2005 and €14m from Q4 2005.

By John Kennedy