Irish VC investment falls 30 per cent

Although Q2 venture investing in Ireland has picked up compared to Q1, the year-on-year figures reveal a marked drop in total investment.

Ireland has become the latest addition to the list of countries that have witnessed a sharp fall in venture capital investment. The level of investment in Irish firms for the first six months of 2002 has fallen by over 30 per cent to E147.5m, compared with E220m in the first half of 2001, according to figures published by Irish corporate finance house Ion Equity. Ion forecasts that the year-end figure for 2002 will reveal a drop of around 40 per cent to a total below E300m, down from E450m invested in 2001.

The latest figures did however offer some cause for optimism with Irish firms attracting almost twice the amount of venture capital in Q2 as compared to Q1. The average investment size in Q2 was E6.9m against a Q1 average of E2.6m, suggesting that it was the more advanced firms that were attracting second or third round funds this quarter.

A total of 14 companies in Ireland attracted E96.5m in Q2 against E49m raised by 19 companies in Q1. Recent VC investments in Ireland include Trinity Venture Capital’s E9m funding round for a software provider in May. The largest Q2 investment was in Cognotec, a Dublin-based provider of foreign exchange software, which attracted E15m from investors including FinVentures, Warburg Pincus and Softbank.

Colin Forker, associate director of Ion Equity said that Irish companies were faring well given international trends in VC, which have seen venture capital investments in technology companies fall sharply across the globe. Recent figures have highlighted a 50 per cent year on year fall in US VC investment in Q2, whilst Israel recorded a 37 per cent drop since in VC investment compared to the first quarter.