Upwards of €200m is available for venture capital (VC) investment in Ireland and 90pc of this is likely to be invested within the technology sector. So said Shay Garvey, chairman of the Irish Venture Capital Association (IVCA) at the association’s annual dinner in Dublin last night.
Commenting on the health of the Irish VC sector, he said it had negotiated the technology boom and bust of the past 10 years better than most European countries. “The original VC funds set up in 1994 have generated good returns for their investors. Also in the first nine months of 2004 there have been a number of trade sales of Irish companies at high valuations,” he said, alluding to the recent sale of Eontec to Siebel and of Spectel to Avaya. He also noted that aggregate investments made by Irish VCs in the past decade now stands at close to €1bn spread across hundreds of companies.
Sounding a note of warning, Garvey said that if the indigenous technology sector is to be a real engine for Irish growth then the number of startups needed to increase from the current 200 a year to 500. He said that the desired 500 technology start-ups a year would need increased VC investment to grow and to be successful.
The venture capital industry itself therefore needs to grow both in people, capital under management and also in the skills it brings to bear in assisting companies develop and be successful, he said. “The Irish VC industry itself needs to internationalise and strengthen investment links with international VCs,” said Garvey.
He also warned that Ireland could no longer rely on foreign direct investment where growth rates will inevitably decline. “We have got to increase export growth from the indigenous sector where the only ray of hope in the past 10 years has been the export of internationally traded services and technology, particularly software.”
Garvey welcomed the increased investment in third level research and development by the Higher Education Authority and Science Foundation Ireland but said that this needs to be further increased to reach the levels of investment in other European countries.
By Brian Skelly