It seems common sense to believe that the current economic turmoil spells disaster for the funding hopes of companies in the Republic's emerging information technology sector. I contend that it does not.

Certainly, the horrors of New York and Washington have done nothing to improve the prospects of such companies in what was an already difficult environment. But at times like this - when the big picture gets the attention and the detail gets ignored - it's critical to stand back to see whether an analysis that may be valid at a broad level is equally so for a sub-sector such as emerging IT.

I watched the atrocities in the US from Cannes, where I was speaking at a conference attended by more than 100 of Europe's largest and most influential venture capital (VC) companies. It was instructive to observe their reaction as events unfolded.

Despite everything, venture capitalists remain keen to invest in enterprising companies - in the Republic or elsewhere. Seasoned VC professionals are already looking through this downturn and seeking the winners in the next upturn - perhaps three to five years on.

That's not to say that investors haven't learned hard lessons over the past year or so. A chunk of the money invested last year was pumped into ill-advised projects and has been written off. That leaves those responsible looking somewhat foolish and may make them reluctant to look at early stage funding.

However, for many others, particularly specialist funds or funds attached to major corporates, the view is that this is the best time in a number of years to be investing.

There's more clarity about what is required to succeed, and valuations are at a fraction of those sought 12 months ago. There is also vastly more money available in Europe than ever before, with £48 billion (€61 billion) being raised last year. This was an increase of 89 per cent on the previous year. This weight of money has allowed technology-focused VCs in Europe, for the first time, to hire the expertise they need to make informed medium-term judgments.

At the conference in France, the mood amongst the larger, established European VCs was certainly not smug. But it was secure. These people raise money based on long-term returns. And they know from experience that economic ups and downs can actually be useful - giving potential for the savvy investor to pick up undervalued assets for offloading at a profit subsequently.

They also know that the shakeout in the investment community - and the disappearance of the arrivistes - means a less competitive environment for proven players like Britain's Cinven to complete its current £3.5 billion sterling (€5.6 billion) fund-raising.

So if these funds still have an appetite for investing, what type of opportunities are they likely to want to pursue?

For technology companies, there were some clear messages. In general, any company whose business relies on generating significant revenue growth over the next 12 months is highly unlikely to get a receptive audience. "Bubble" companies, in the Republic or elsewhere, are in trouble - things will get worse for them before they get better.

But for many Irish companies there may, somewhat surprisingly, be a queue of interested specialist VCs. These are firms which have a genuine knowledge of their customer base, are developing products based on difficult-to-replicate R&D and expertise, and plan to exploit inaccessible markets in the medium term.

Recent investments in the Republic provide evidence of this - including Cape Clear with $16 million (€17.3 million), Comnitel ($15 million) and Ntera (€23 million).

The Republic is regarded as a sensible place in which to invest. Internationally, the country is seen to be in an exciting phase, where R&D programmes (often coming out of the universities) are spawning real innovation-based companies in the mould of Iona.

A cloud on the horizon, however, is that international VC players seem to anticipate difficulties in getting access to good deals here.

Some Irish intermediaries are seen from abroad more as brokers than advisers. A perception that little depth of knowledge and minimal rigour is being applied to pre-qualifying a company before presenting it to increasingly sophisticated investors doesn't do us any favours.

All in all, however, the mood in France was positive about the VC industry and the Republic. So, despite the lamenting of the Jeremiahs, there is plenty of capital available to exploit genuine innovation.

Indeed a number of funds are very cash-rich and are eagerly looking for investing opportunities - not surprising when you realise that investing is their business and they do not want to hand the money back to those funding them.

The key now is to put the wake on hold. This is a downturn - not an ending. Companies should continue to support R&D spending and, if possible, intensify start-up help through Enterprise Ireland, the universities and so forth, to facilitate the creation of as much indigenous technology activity as possible.

Neil O'Leary is chief executive of venture capital firm Ion Equity