Venture fund targets young hi-tech firms

Agincourt, a $200 million (€183 million) Irish venture capital fund set up yesterday, will target developing technology companies and provide them with marketing expertise to export to the US.

On its advisory board are Senator George Mitchell, economist Dr Peter Bacon, and Mr Pat O'Neill, the outgoing chief executive of Avonmore Waterford Group.

Its two managing partners are Mr Pat Durkan, who worked on AIB venture capital projects and Mr Paul Kane, a US-born specialist in technology companies.

Mr Kane said yesterday that companies involved in the development of software, e-commerce and computer components would be targeted. Such companies were "flying under the radar" of established venture capital funds and had been viewed with "polite scepticism".

"There is a shortage of venture capital for early stage companies within this sector," he said.

About $30 million of funding, representing the capital of Agincourt's 25 partners, had already been committed, Mr Kane said. This figure was expected to rise to $40 million, the minimum for a first closing, by the end of the year.

There were currently between 15 and 18 prospective companies Agincourt hoped to fund.

The remainder of the $200 million fund, which would be placed over four years, would be raised in the US, where there was a greater "appetite" for risk-taking. Agincourt will take a minority stake in its chosen companies, with the expectation of receiving an annual return of between 25 per cent and 30 per cent. The investment would last between five and seven years, by which time Agincourt would hope to have a client company sold or for it to become involved in acquisitions. It will also establish an export advisory service with a US network for companies wishing to develop an export market there.

Commenting on the sector's future, Dr Bacon said that already in the financial sector, companies were seeking to keep costs down by focusing on new information technology requirements, while banks were realising that e-commerce would be where the competition would be in the future. Mr O'Neill, who is stepping down from his position in Avonmore Waterford later this month, said the advisory role Agincourt would provide was an essential element.