A prominent US investment bank is in the early stages of establishing a $50 million (€47 million) venture capital fund for Irish technology companies. It will focus on emerging firms seeking a series of rounds of capital amounting to between $5 million and $10 million each and with the ultimate goal of a stock exchange listing.
Hambrecht & Quist, which acted as underwriter for Apple, Saville Systems and Parametrics, when they were seeking stock market listings, is expected to base the model on a similar fund it launched in Israel nine months ago.
The plan is said to be very much in its infancy, and though Hambrecht & Quist managing director, Mr Jim Hayes, was reluctant to comment, he told The Irish Times: "Ireland has companies at the moment that look like they could play on a world basis. I think the Irish are making big strides, and would say we do have an interest in Ireland for investment."
It is expected that Hambrecht & Quist will seek a partner within the Irish market to administer the fund. It will not need to contribute to the fund, and may even be selected from outside the institutional investment community. Industry sources say Hambrecht & Quist is simply interested in finding someone working "on the ground" in Ireland with good knowledge of activity within the indigenous technology industry.
It will be at least a year before the fund is established, but it is likely to operate along the lines of its Israeli counterpart. That fund was administered by Mr Bruce Crocker, managing director of Israel-based Eucalyptus Ventures. Hambrecht & Quist provides "mezzanine funding", concentrating on companies that have already received an initial round of funding and need substantial capital to establish a global presence.
Mr Hayes said the venture capital industry in Ireland is still sort of "Mom and Pop" with only tiny investments taking place. "And I think it's fair to say American companies are strongly looking to place money in Ireland, but they want to make big-scale investments." It is unclear whether Mr Crocker will be charged with the administration of the proposed Irish fund, but his efforts in the Israeli market succeeded in generating capital investment for seven companies there. Each would have been allocated between $5 million and $10 million, staggered over a series of funding rounds.
The thrust of Hambrecht & Quist's activity is bringing companies onto stock exchanges and investments are decided with this in mind. Irish investments are likely to be in the areas of digital signal processing, differentiating Internet technology and smart software.
Mr Hayes says technology innovation in Ireland is five years behind Israel. Speaking in Boston this week at the third Technology Investment and Partnering Opportunities for Israel and Ireland annual conference, Mr Hayes said the quality of the 17 presenting companies from Ireland had increased dramatically over a very short period. However, he warned that Irish companies cannot expect to pick up funding overnight.
However, it is anticipated that the Hambrecht & Quist fund in Ireland would provide faster turnaround of significant capital, an increasing requirement of high growth start-ups.
The proposed fund is further evidence of increased US interest in Irish technology companies. It emerged this week that the governor of Boston, Mr Argeo Celluccie, will lead a trade mission of Massachusetts companies to Ireland and France in June. The week-long tour, which culminates in Dublin Castle, will be a networking event for US companies seeking to expand their operations, or partner with European companies in order to take advantage of the EU market. The key attractions of Ireland are the "highly skilled workforce, easy access to the lucrative European market place, and generous incentives to foreign companies", according to a spokesman for the Massachusetts Trade Office.
