Venture capital raised by Irish tech firms plummets 50pc

27 May 201028 Views

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Some €27m in venture capital funding was raised by Irish technology companies, down 50pc on last year. The Irish Venture Capital Association (IVCA) says deal sizes have fallen and the situation may worsen.

“While this is disappointing, the positive news is that the number of companies raising funds (32) is the same,” commented John Tracey, chairman, IVCA and CEO, TVC Holdings plc.

“Individual activity has kept up but average deal size has fallen.”

This is partially reflected in the fact that first-round funding was 39pc of funds raised, compared to 30pc in the first quarter of 2009.

Government cutbacks

“While early stage funding has held up, we would be concerned that Government cutbacks at Enterprise Ireland may endanger this later in the year,” added Regina Breheny, director general, IVCA. Amounts raised in the first quarter ranged from €100,000 to €4m.

Commenting on the decline from last year, she said that quarterly comparisons can be distorted by individual large rounds.

“While average deal size has fallen by approximately 30pc to €850,000, expectations are that activity levels and deal size will pick up as the year progresses. There are indications that the cycle is starting to turn in the US.”

The IVCA Venture Pulse survey measures funding raised from domestic and international venture capital funds, from AIB and Bank of Ireland seed capital funds, Enterprise Ireland and from private investors, including angels.

The survey shows that Irish venture capital firms provided 38pc of the funds raised in the first quarter with 42pc coming from abroad.

“It is not always appreciated the importance of early local VC involvement in attracting larger international investment in later rounds,” Breheny said

Sectors

  • – In the pharma/biotechnology sector, one company raised €750,000
  • – In the drug delivery and medical device sector, four companies raised €6.1m
  • – In the telecoms sector, two companies raised €790k
  • – In the environment technology sector, five companies raised €2.6m
  • – In other technology (including nanotechnology, fibre optics, photonics and semiconductor chips) servicing a wide range of industries, four companies raised €1.5m
  • – In the business services sector, 13 companies raised €11.1m
  • – Other – three companies raised €0.7m

By John Kennedy

Editor John Kennedy is an award-winning technology journalist.

editorial@siliconrepublic.com