Irish venture capital 'tightening' - survey

Funding available for venture capital investments is "tightening", according to a survey released yesterday by the Irish Venture Capital Association (IVCA).

The annual survey found that just 25 per cent of VC companies plan to invest in new projects this year compared to 80 per cent last year. Sixty-two per cent plan to continue investing in existing companies.

Association chairman Desmond Fahey said in a statement that the drop of interest in new projects signalled that the "investment capital available to the Irish venture capital industry is close to being 100 per cent committed".

The technology sector needs new capital to continue investment, he added.

Nearly €4 billion in venture capital investment would need to be raised over the next five years to feed demand in the market, Mr Fahey said.

This compares with a figure of €1 billion invested by Irish VC firms in the past decade, according to the association.

Ther IVCA survey said client companies were also moving toward public offerings. Fifty-six per cent of respondents believed companies in which they had invested funds would look to list on stock markets over the next couple of years.

Eighty-seven per cent predicted an increased level of exits via trade sales. The association said this indicated an increased interest by international companies in buying Irish firms.

"This is a significant development for the industry as investors in VC funds can now expect a profitable return on capital," Mr Fahey said in a statement. He added that venture capital funds are in a "better position to liquidate investments because exit markets are improving all the time".

Finding quality staff remained a problem for companies. The availability of international sales experts and senior management were listed as their top resource concerns.

One-third of respondents named the lack of an experienced management team as a main reason for declining an application for funding, with an overall lack of realism in a proposal accounting for a similar number of refusals.

Lack of research on potential markets was the other notable slip-up among companies looking for an injection of VC funding .