Tech firms continue to raise venture capital despite credit crunch

1 Nov 2008

Local knowledge companies raised €70.8m from venture capitalists in the three months leading up to September.

Firms raised €75.4m during the same period last year, and €53.9m during the same period in 2006, according to the latest Irish Venture Capitalist Association (IVCA) VenturePulse survey.

The total raised in 2008 to date is up 23pc to €174.3m, compared to €141.5m in the same period last year, and €162.7m in 2006.

“Venture capital (VC)funding has held up well, despite a shortage of liquidity across the financial sector in general,” commented Regina Breheny, director general, IVCA.

“This is important as a vigorous, indigenous Irish tech sector has an important role to play in building a knowledge-based economy.”

The number of companies that raised funds in the last quarter was 16, compared to 42 in the same period in 2007, and 12 in 2006. Amounts raised ranged from €200,000 to €25m.

The number of companies that have raised funds this year is 64, compared to 73 in the same period in 2007, and 31 in 2006.

In the third quarter, there were 11 Irish-based VC funds and private investors involved, and nine international funds.

The number of Irish investors involved this year to date is 22 representing 92 investments. 16 international funds made 18 investments.

“Irish companies continue to attract interest from international as well as local VC investors,” Breheny added.

A breakdown of where the funds are being invested shows that in the drug delivery and medical device sector, three companies raised €3.9m in the last quarter. In 2007, eight companies raised €7.25m. There were no investments in this sector in 2006.

In the telecoms sector, two companies raised €17.6m. This compares to four companies raising €9.9m in 2007, while four companies raised €27.8m in 2006.

In other technology (including nanotechnology, fibre optics, photonics and semiconductor chips) servicing a wide range of industries, five companies raised €2.4m this year. In 2007, 29 companies raised €56.9m, and in 2006 eight companies raised €26.1m.

Two sectors that featured prominently in this quarter were the communications sector, where two companies raised €25.2m, and the business services sector, where four companies raised €21.7m.

By John Kennedy

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years