VC funding down by half in first quarter

TECH SHORTS:INVESTMENT BY venture capital firms in Irish enterprises fell by 50 per cent in the first quarter of the year, according to the IVCA, the Irish Venture Capital Association.

According to the report, 32 technology companies raised €26.6 million over the three-month period compared to €53.5 million in the same quarter of 2009.

“While this is disappointing, the positive news is that the number of companies raising funds is the same,” said association chairman John Tracey. “Individual activity has kept up but average deal size has fallen.”

One of the largest deals during the period was done by Galway-based medical device firm Veryan, which secured €4 million in funding from investors led by Dublin-based venture capital firm Seroba Kernel, along with Imperial Innovations, Oxford Capital Partners Limited and Nesta.

The funds will be used to fund the development of its 3D stents and will facilitate a clinical trial designed to show the benefits of its stent technology.

Internet firm Weedle, meanwhile, attracted funding of €3 million during the quarter, from Enterprise Ireland and a number of private investors, to expand its social media platform.

First-round funding, or seed funding, accounted for 39 per cent of funds raised, with 15 firms raising at total of €10.3 million. This compares to €15.9 million raised by 12 companies in the same quarter a year earlier, accounting for 30 per cent of that quarters funding.

There are concerns that early-stage funding could deteriorate later this year if cutbacks are made at Enterprise Ireland.

The agency made several investments over the period, contributing to funding for Weedle, Neuravi, Supplierforce, Technology from Ideas and Teamer.

The association’s director general Regina Breheny said the average deal size had fallen by about 30 per cent to €850,00, but she was optimistic that the sector would show some improvement in the near future.

“Expectations are that activity levels and deal size will pick up as the year progresses,” Ms Breheny said.

“There are indications that the cycle is starting to turn in the US.”

A significant amount of the funds raised during the quarter came from abroad, with overseas firms accounting for 42 per cent of the investment. Some 38 per cent came from Irish venture capital firms.

“It is not always appreciated the importance of early local VC involvement in attracting larger international investment in later rounds,” said Ms Breheny.