Investments in knowledge economy show steep decline

INVESTMENTS AND other equity transactions in the knowledge economy collapsed in the first quarter of this year, according to new research.

The Who42 Equity Funding Quarterly shows the value of all transactions in Ireland’s know-ledge economy during the first three months was €51.1 million, down over €140 million on the last quarter of 2008.

The figure for the first quarter of 2008 was €2 billion, but this figure included the €1.08 billion sale of the European operations of renewable energy firm Airtricity to Scottish and Southern Energy.

During the first quarter of this year all the activity consisted of investments. Who42 did not track any sales of Irish companies in the sector. There were two acquisitions – Duolog’s purchase of British firm Beach Solutions and Creganna’s acquisition of technology and patents from Swiss company Micromuscle – and just one merger, between Etrip and Eazy Pass, but the value of the deals was not disclosed.

The value of investments actually increased 18.5 per cent on the prior quarter and 14 per cent over the year-ago period, but the number of transactions was down by half compared to both periods.

The bulk of investment was accounted for by two transactions. Mainstream Renewable Power, the company established by Airtricity founder Eddie O’Connor following the sale to Scottish and Southern Energy, raised a €26 million loan note for investment in a number of wind farm projects. Biotech company Opsona raised €18 million from a group of venture capitalists for the development of a number of drug treatments.

The other investments during the quarter were in AMCS, a Limerick start-up which raised €5.2 million for its waste management system; OfficeMetrics, which got a €1 million investment to develop its software productivity suite; Micks Garage, the e-commerce car parts retailer which raised €500,000; and Lookandtaste.com, a recipe website which enjoyed a €400,000 investment.

“We expect to see a similar level of performance for Q2 with some increase in activity returning in the second half of the year,” said Neil Pope, a director of Who42. “As private money switches from the bad banks and [from] property, low interest rates, continued debit restrictions for big deals and the looming return of inflation, venture investing will grow.”

Who42 provides advice on funding and staffing to companies in the sector and publishes a quarterly review of transactions.