Investment surveys split on knowledge economy health

THERE WERE conflicting opinions on the health of the knowledge economy this week, with two surveys on investment in the sector seemingly drawing different conclusions.

According to the Who42 Equity Funding Quarterly for the final quarter of 2008, transaction activity in Ireland’s knowledge economy fell €1.25 billion to €202.55 million compared with the previous quarter.

In the fourth quarter, transaction activity in acquisitions and disposals fell dramatically, with no transactions taking place, according to consultants Who42.

However, the overall picture may not be so bleak for companies in the sector. The Irish Venture Capital Association Venture Pulse survey found that Irish technology firms raised €242.9 million in 2008, a rise of 7.5 per cent on the previous year.

It found that in the final quarter of 2008, companies raised less from investors – €68.6 million, compared with €84.5 million in the same period of 2007 – but the number of companies that raised funds in that period rose to 40 from 32 a year earlier.

“Despite the global credit crunch, the amount of funds raised by Irish companies is at its highest level since 2002,” said IVCA chairman Joe Concannon.

Although the Who42 survey said the overall level of transactions it tracked, including mergers and acquisitions, had declined steeply in the second half of last year, it also found that the amount of investment going into companies in the knowledge economy remained consistent, and may have even showed a slight increase on previous figures.

The economic downturn is having an impact on venture capital investment, with many traditional sources of funding playing it safe for the time being. However, some sectors continue to attract investment, with the life sciences sectors and “clean tech”, such as renewable energy, attracting a lot of attention, Who42 director Neil Pope said.