Northern Ireland is lagging well behind other regions of the UK in terms of venture capital investment, according to research carried out jointly by the University of Ulster and the University of Southampton.
The research found that £20 million sterling was invested in Northern Ireland companies last year in the form of venture capital. That represents only 0.7 per cent of the UK total. Given the size of the regional economy, the figure should be closer to £100 million.
The research was carried out by Prof Richard Harrison of the University of Ulster and Prof Colin Mason of the University of Southampton.
The study found that Northern Ireland had not shared in the national expansion of venture capital investment in the 1990s. Between 1992 and 1997 UK venture capital investment rose by 145 per cent from £1.25 billion to more than £3 billion. In Northern Ireland it fell by 28 per cent, from £28 million (2.2 per cent of the UK total) to £20 million.
Three-quarters of venture capital investment in Northern Ireland is in seed, start-up, and early stage entrepreneurial businesses - a higher proportion than in other UK regions. Even so, in 1997 it was 60 per cent less than might have been expected.
"These companies are the growth businesses of tomorrow," Prof Harrison said. "Lack of venture capital investment in this area means that there is a danger that the local economy will continue to lag behind that of other regions. It represents a constraint on the development of a dynamic entrepreneurial economy, and reflects a number of factors."
Until recently, Northern Ireland has had few locally-managed sources of venture capital, "which has been a major constraint on investment", Prof Harrison said.
