Venture capital investment in Irish firms surged 41pc in 2014 to €401m

18 Feb 2015

Irish start-ups raised €401m from venture capital investors in 2014, a surge of 41pc on 2013 when Irish firms raised €285m.

According to the latest VenturePulse survey by the Irish Venture Capital Association, since the onset of the credit crunch in 2008 over 1,000 Irish SMEs raised venture capital of €2.1bn.

“The Irish venture capital community continues to be the main source of funding for Irish innovative SMEs both through direct investment and as the local lead investor for international syndicates who invested €200m in this period,” said John Flynn, chairman of the Irish Venture Capital Association.

First round seed funding recovered in Q4 to deliver annual growth of 31pc over 2013. However, Stephen Keogh, a corporate partner in William Fry, which acted as legal adviser in over 30pc of the funding rounds during the year, emphasised that seed funds supported by the banking sector and Enterprise Ireland’s Seed & Venture Capital Programme of 2006-2012 are close to being fully invested.

“The importance of seed and early stage funding cannot be overestimated,” Keogh said.

“We need to back promising early stage start-ups in order to build a pipeline of successful Irish firms. While Foreign Direct Investment makes a valuable contribution to the Irish economy, it is increasingly mobile and it is important that we do not become over dependent on it,” he added.

If you’re going to San Francisco …

Pictured: Regina Breheny, director general, IVCA

Funding for expansion represented 83pc of the €401m invested in 2014 while 13pc were raised by five Irish companies heading directly overseas, mostly to Silicon Valley.

“The growing ability of indigenous firms to raise investment in Silicon Valley is a tremendous validation of Irish technology and reflects a growing confidence among Irish entrepreneurs,” added Regina Breheny, director general, IVCA.

The IVCA VenturePulse survey shows that Irish companies raised €400.8m from investors in 2014. This compares with funds raised from investors of €284.9m in 2013 and to €269m in 2012, an increase of 49pc in the two year period.

“These funds were raised almost exclusively by Irish VC fund managers who during this period supported the creation of up to 20,000 jobs, attracted over €865m of capital into Ireland and geared up the State’s investment through the Seed & Venture Capital Programme by almost seven times,” Flynn, who heads up ACT Venture Capital, explained.

Total seed funds raised in 2014 is €66.8m (17pc of total funds raised). This compares to €51.6m (18pc of total funds raised) in 2013 and to €53.7m (20pc of total funds raised) in 2012, an increase of 24pc in the two year period.

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