Venture capital investments in Q3 up on last year

13 Oct 2006

Venture capital investment in Irish technology companies in the third quarter of 2006 more than doubled the level of a year earlier with €53.9m pumped into 15 different companies.

The latest Techpulse report from Ion Equity warns that while the level of funding in the third quarter was very positive, it is unlikely to set a pattern and that total venture capital investment this year is likely to be very much the same as last year.

“The major Irish funds such as ACT, Delta and Trinity are all reportedly coming to the end of their current funds and are likely to reduce new deal investment activity as they set about raising fresh funding. This will undoubtedly have an effect on the overall level of investment over the coming quarters,” explained Dr David Fewer, director of Ion Equity.

According to Ion Equity, broadband and semiconductors were the main focus of investment during the third quarter, with the €20m investment in Digiweb by the Whelan family being the biggest deal of the quarter.

Dr Fewer said that the rate of investment in the third quarter is a very high level of investment in what is traditionally one of the slowest periods for the year.

The 15 investments meant that Q3 of 2006 was one of the most active quarters for venture capital investment for more than three years.

Dr Fewer said that the third quarter figure is also 13pc higher than the second quarter of 2006, which is traditionally the most active quarter of the year.

Dr Fewer said that activity in the third quarter was driven by two factors: non-traditional technology investors continuing to support broadband service providers and a significant increase in the number of investments in semiconductor companies.

The single biggest funding was the €20m investment in Digiweb by Moritz Holdings, the holding company for the Whelan family which owns Maplewood Homes and which is also involved in a number of international property investments.

The investment by Moritz contrasts with recent developments at Irish Broadband, which has received more than €50m in investment over the years from NTR plc. NTR has already stated that Irish Broadband is no longer a part of its core business and is reportedly interested in selling its stake for €60m.

In the semiconductor sector, there were investments in Duolog, Redmere, Powervation, Dajeil and one undisclosed company varying in scale from €1m to €5 million. “This could be indicative of a partial revival of the sector in Ireland as there were only four semiconductor deals completed in the previous 18 months,” Dr Fewer said.

Another noteworthy deal was an early-stage €500,000 investment in Nubiq by Enterprise Ireland and eTen. Nubiq is one of a number of Irish companies seeking to establish social networking and communities in the mobile environment.

“They are looking to follow the success of companies in the internet space such as MySpace in the US and Friends Friends Reunited in the UK, which were sold over the past 18 months for a combined value of over US$800m,” Dr Fewer said.

By John Kennedy