Tech firms lead VC charge

17 Feb 2006

A total of €30.5m in venture capital was invested in Ireland during the last quarter of 2005, the Ernst & Young/Dow Jones VentureOne Quarterly European Venture Capital Report has revealed. IT continues to be a strong performing area for Ireland, in contrast with its decline across Europe.

The figure is significantly higher than the €21.9m amount invested in the previous quarter as well as the €20.1m invested during the last quarter of 2004.

The Ernst & Young/Dow Jones report reveals that ithe total figure invested in Ireland for 2005 was €124.3m, a 13pc increase on the total for 2004 of €109.7m.

Compared with 2004, Europe experienced a 16pc decline in the number of financing rounds to 1,020 and a 5pc decline in investment, to €3.6bn.

Investment in Q4 2005 in Ireland was dominated by two larger deals which included the €14m first-round funding raised for Channel 6, the Irish TV Channel and a €10m round for Silicon & Software Systems (S3).

In line with the rest of Europe, Ireland experienced a decline in the number of first- and seed-round financings in Q4 2005, down to only one deal in comparison to two in the same period in 2004. Across Europe, the number of deals dropped to a total of 80 first- and seed-round financings, compared with 102 the same period in 2004.

Investment in IT accounted for all of the four deals during the quarter. At €30.5m, this is a sizable increase in comparison to the €11m invested in IT in Q4 2004. However the total volume of deals decreased significantly from nine in Q4 2004 to four in Q4 2005. No investment was made in the healthcare industry in Q4 2005, in contrast with a solid performance in the first three quarters of the year in this sector.

Garry O’Rourke, senior manager, Ernst & Young Ireland, said that the figures for the last quarter of 2005 are significantly reliant on a small number of large deals.

“As the Irish market is quite small, venture capital figures should be viewed in a yearly or longer term, rather than on a quarterly basis, to assess trends,” O’Rourke explained. “2005 was a steady year for investment in the Irish market, with the overall amount invested showing an increase in comparison to 2004 and 2003. IT continues to be a strong performing area for Ireland, in contrast with its decline across Europe.”

In Europe, the UK remains the most active country but deals were down 9pc and capital was down 11pc to €1.04bn. Ireland was twelfth in the number of deals, equal with Spain and behind the Netherlands and Norway. By the amount raised, Ireland was in 10th place.

By John Kennedy