Ireland’s €175m venture capital fund could be worth €1bn in its lifetime

6 Dec 2012

The €175m venture capital fund being established by the Irish Government through Enterprise Ireland could have a real value of €1bn as venture capital firms could leverage the funding by a factor of eight to 10 times.

That’s the view of the Irish Venture Capital Association (IVCA), which described the move announced in yesterday’s controversial 2013 Budget as ‘enlightened’.

“This is a timely, smart strategic move by the Government and a strong vote of confidence in the Irish venture capital industry,” Dr Manus Rogan, chairman, IVCA, explained.

“It will help us continue to play an important role in the recovery of the domestic economy.”

Up to 21,000 innovation jobs predicted

The IVCA estimates that within 10 years the innovative companies supported by venture capital investment will provide up to 21,000 new, high-calibre direct jobs (engineers, scientists, other professionals) and a further 21,000 indirect jobs, based on a 1-to-1 multiplier.

Rogan noted that in some sectors, multipliers for indirect jobs could exceed 5-to-1 in such sectors as the medical devices industry.

Regina Breheny, director general, IVCA, added: “Venture capital is the only viable source of capital for these innovative SMEs. They are export focused and are an essential part of creating a knowledge-based economy.  

“In addition, their R&D spend represents almost half of all the indigenous SME R&D spend.”

She added that Irish VC firms invest more in technology and knowledge-based companies than in the rest of Europe.

“High technology companies accounted for 92pc of all investment by Irish venture capitalists in recent years. This is the highest proportion of investment in technology companies in Europe, where the average is 31pc, with only four countries investing greater than 50pc,” Breheny said.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years