Investment in Irish technology companies fell sharply in the third quarter of 2004 to just €23.2 million, reflecting the typical seasonal lull in the summer months, a survey published today shows.
The TechPulse survey by Ion Equity shows there were just seven deals during the quarter, as funding slumped from €87.9 million in the second quarter to €23.2 million in the three months to the end of September this year.
However, the funding climate in the third quarter actually improved compared with the same three-month period last year, when just €18 million was invested in technology firms.
"The level of investment in the third period partly reflects the traditional seasonal lull in the summer period and we expect some pick-up in the level of investment in the coming quarters," said Mr Neil O'Leary, chief executive of Ion Equity, a Dublin-based corporate finance firm.
The third-quarter figures show continued strength in the telecom software sectors with fund-raising for telecom rating firm Am-Beo and telecom operator middleware firm MobileAware.
There was also an increased level of investment in life sciences and biotech firms, with investments in the artery-sealing devices firm Nova Science and also in Genable Technologies, which develops gene therapies for the treatment of inherited diseases, said Mr O'Leary.
The biggest single investments in the period were the €5 million invested in Nova Science by ACT, Advent, Intel and Enterprise Ireland and a similar investment in Microsol by ICC Venture Capital and Anglo Irish Bank.
Other companies that raised cash during the third quarter were the technology firms Havok and LeCayla, which raised money from Delta Partners and Trinity Venture Capital respectively.
Mr O'Leary said investment should pick up during the fourth quarter but it would probably not reach the levels seen in the second quarter of 2004 when a large number of deals distorted the overall trend.
"There is plenty of capital available but fewer good candidates are coming through for later-stage funding than was the case two or three years ago," he added.
In recent years Ireland has been viewed favourably by international investors as an attractive market for technology investment.
In 2001 €297 million was invested in firms; in 2002 €152 million was invested, while in 2003 investment came to €38 million.
