Irish venture capital investments jump 300pc

5 Sep 2007

Over €14.6m was invested in Irish companies during the second quarter of 2007, a three-fold increase compared with €4.2m in the previous quarter and €8.8m in the second quarter of 2006.

According to Ernst & Young three deals took place in Ireland in the second quarter, compared with one deal in the first quarter and eight deals in the second quarter of last year.

Overall across Europe, the value of venture capital investments increased 5pc to €1.1bn despite a reduced number of 213 deals, which were down 20pc on the year. This was due to a significant increase in deal sizes in early-stage investments.

Year-over-year investment was up and deals were down in nearly every industry, with healthcare companies seeing the biggest change raising 10pc more capital in 34pc fewer deals.

European IT companies attracted the bulk of overall investment; raising more than €690m in 138 deals. IT deals were down 12pc from the 156 completed in the second quarter of 2006, but the total amount of money invested was up 3pc year-on-year and represented the largest quarterly investment in IT companies in Europe for five years.

The IT sector saw the resurgence of semiconductor investing as European chip companies completed 16 venture rounds in the quarter, raising over €127 million in capital, the highest total since the third quarter of 2001.

Accounting for the bulk of activity, nine later-stage chip companies raised €98m in capital, a tenfold increase over 2006. One of the larger deals was the €22.5m later-stage financing of Swedish WLAN chipmaker Nanoradio.

Also of note was an 11pc increase in deals for information services companies – include blogs, social networks, wikis and other Web 2.0 technologies – which completed the most deals since 2002 with 42 rounds but raised just €127m, 38pc less than in the second quarter of 2006.

In the healthcare sector, biopharmaceutical companies accounted for 66pc of deal flow, attracting €243m in 27 deals.

“The record median round size in Europe this quarter is the continuation of a trend that we have observed over the last 18 months in which investors are providing greater sums to fewer companies, allowing those companies to better compete globally and build critical mass for an IPO or M&A,” said John De Yonge, research director for the Ernst & Young Global Venture Capital Advisory Group.

“During the same period, the proportion of deals and dollars directed to early-stage investments has increased, indicating that European investors are supporting a healthy pipeline of innovation in emerging sectors such as clean technology,” De Yonge said.

By John Kennedy