Ireland is the latest country to take venture capital into its own hands. It has launched a €500 million fund of funds, Innovation Fund Ireland, which it hopes will draw global venture capital fund managers to invest in Irish start-ups and SMEs.
Through its indigenous job creation agency Enterprise Ireland, the Irish government has been investing as a limited partner in venture capital funds since the mid-nineties. Irish venture capital firms supported by the body made 87 investments with a value of €52m in 2009, a 53 percent increase from investments made the previous year.
Enterprise Ireland will be managing one half of the fund, and the National Pensions Reserve Fund the other. Both will each make up to €125 million in commitments. Venture firms receiving an investment from either body will have to match it by committing at least an equivalent amount to the investee company in question. Once both bodies deploy their combined total of €250 million in funds, this will effectively mean a total of €500 million invested.
The government hopes its fund of funds will act as a “catalyst for the further internationalisation and expansion” of the Irish venture capital market, Garrett Murray, an investment advisor at Enterprise Ireland, told PEO.
In addition to possessing an established track record of raising funds and generating returns, interested parties must intend to establish a physical presence in Ireland and to invest a “meaningful” proportion of their funds in Irish-based companies.
The closing date for applications is 26 November.
A similar scheme, the UK Innovation Investment Fund, was launched in 2006 to invest in venture capital funds. Others similar initiatives include the Ontario government’s $205 million Ontario Venture Capital Fund, and most recently, the South Korean government’s W200 billion ($178 million; €123 million) venture capital fund initiated in January 2010.
In October 2009, The European Private Equity and Venture Capital Association announced it was in talks with the European Commission over the potential creation of a 10-year, €1.5 billion European venture capital fund of funds programme. No new news about the initiative has since emerged.