Venture capital down 11.5%

THE AMOUNT of venture capital funding raised by Irish technology companies fell by 11.5 per cent last year, though the number of companies who succeeded in attracting funding increased.

Figures released by the Irish Venture Capital Association (IVCA) show that high-tech Irish companies raised €274.4 million from investors in 2011.

This compares to €310.2 million for 2010.

While first-half funding in 2011 was up 58 per cent on 2010, the second half of the year saw a steep decline, with venture funding dropping by 46 per cent compared to the same period in 2010.

However, 159 Irish technology companies attracted investment last year, up from 156 in 2010 and 139 in 2009.

According to Regina Breheny of the IVCA, the increase reflected the fact that a larger proportion of seed or small-cap companies – who are limited in the amount of money they can raise – were successful in raising funds last year.

Seed companies represented 38 per cent of all funds raised in 2011, compared to 17 per cent of funds raised in 2010.

“What we are seeing is that mid-sized companies, those which are established and need the next stage of funding in order to scale up, are finding it difficult to raise funds,” she said.

Last year also saw a drop in the amount of money raised from non-Irish venture capital funds, the IVCA said.

Ms Breheny said the amount of money channelled into Irish firms by overseas VC funds dropped by €90 million last year. This could reflect a shortage of money abroad, and a reluctance to invest in Europe due to the euro zone debt crisis, she said.

Among the non-Irish funds which backed local start-ups were DFJ Esprit, Unilever Ventures, and Imperial Innovations.

The amounts raised by Irish tech companies last year ranged from €100,000 to €20 million.

The Irish Venture Capital Association is the representative organisation for venture capital firms in Ireland.

In 2009, the government launched a major innovation fund, which included a commitment of €125 million by the National Pension Reserve Fund, to attract venture capital fund managers to Ireland.

According to the IVCA, 547 Irish SMEs have raised venture capital of €1.1 billion since 2008.