VC investment in Irish tech sector ‘at all-time low’

1 Feb 2007

International venture capital funding in Irish technology companies is now at an all-time low, an Irish venture capital firm has warned.

In the first three quarters of 2006 some €150m was invested in Irish technology companies, with just three new investments coming from international venture capitalists (VCs), said Whitebridge Capital, which has an office in Boston.

By comparison, some €844m was invested in Israeli technology companies in the same period, with 55pc of the money coming from international VCs.

Ireland has raised €1.25bn in venture capital funds over the past 10 years compared to €7.68bn raised by Israeli companies.

“This is a major concern as strong international VC investment activity is critical to the overall success of technology Ireland,” explained Mark Fenelon, founder and director of Whitbridge Capital.

Whitebridge Capital provides the advisory structure to connect international VCs with emerging Irish companies and focuses exclusively on mid-market sectors like technology, media, telecoms, semiconductors and clean technology.

Fenelan, who is ex-Goodbody Corporate Finance Technology, continued: “At the height of the technology boom Ireland was attracting a significant share of overall international venture capital investment into Europe. By 2006 international VC activity in Ireland was nearly negligible.”

Fenelan said that one of the barometers to gauge success in the technology industry is the number of listed companies on Nasdaq.

“The gap between Ireland and Israel is enormous: there are presently around 70 Israeli companies traded on Nasdaq and around 30 traded on various European exchanges.

“In comparison there are just six Irish companies traded on Nasdaq (Iona and Trintech being the sole technology constituents) and only a handful of additional technology companies listed on other main exchanges.

“International VCs, in their ruthless time allocation to various opportunities, see Ireland as a ‘low hit rate’ country, purely based on size. In short, small countries don’t attract major VCs and international VCs feel exploring opportunities in the big economies (UK, France, Germany) have a higher probability of success,” Fenalan explained.

He warned: “For Ireland to become a true knowledge nation it will have to take a very hard look at successful countries such as Israel and seek to replicate those success factors in the Irish context.”

By John Kennedy