Ireland bucks poor VC trend

The Irish venture capital market proved the most robust in Europe in the second quarter of the year as the sector suffered depressed conditions across the region, according to figures released by Ernst & Young and VentureOne.

While the number and value of deals dropped across Europe, Ireland bucked the negative trend. There was a substantial increase in the value of deals done in the State, up to €88 million from €15 million in the previous quarter.

A total of 13 deals were done here, with the software sector leading the way with nine deals worth €57 million.

However, while Ireland escaped the worst of the downturn, VentureOne cautioned against reading too much into the upswing compared with the previous quarter. The second-quarter figures are still well down on the fourth quarter of 2000 when 26 deals were done worth €243 million.

VentureOne European director of research Mr Steve Harmston said, because there are fewer deals done in Ireland than in other European nations, a small number of deals can have a significant impact on the quarter-to-quarter trends.

He acknowledged, however, that Ireland had fared better than its European neighbours because venture capital groups in the State tended to be more experienced than similar companies in other countries that had been set up at the height of the economic boom.

He added that the strength of Ireland's software sector had resulted in investors being more willing to fund second-round investment.

Across Europe, venture capital activity continued to decline sharply, with the amount invested down 18 per cent to €1.075 billion while the number of deals done slumped by 30 per cent to 218. At the high point of venture capital activity in the second quarter of 2000, €5.9 billion was raised and 951 deals done.

Worst-hit sectors were information technology, down 18 per cent to €560 million, and retail and consumer products, down by 50 per cent to €106 million.

In Britain, the value of deals done was €324 million, down 33 per cent.

Norway and Sweden were the only other countries apart from Ireland where the picture improved in the quarter.