Venture capital investment rises 13%


A new report on venture capital suggests investment levels are rising strongly in the current buoyant economic climate.

A total of €30.58 million in venture capital finance was allocated in the final quarter of 2005, significantly higher than the same period in 2004.

The Ernst & Young / Dow Jones VentureOne Quarterly European venture capital report shows that in the third quarter of 2005 the investment figure was €21.94 million.

In comparison, it was €20.17 million in the final quarter of 2004.

In 2005, the total figure invested in Ireland was €124.35 million, a 13 per cent increase on the total for 2004 of €109.72 million.

Compared with 2004, Europe last year suffered a 5 per cent decline in investment to €3.6 billion.

Investment in the fourth quarter of 2005 in Ireland was dominated by two larger deals which included the €14 million first round funding for Channel 6, the Irish television channel, and a €10 million round for Silicon & Software Systems (S3).

Investment in IT has been very strong over recent quarters, but the total volume of deals decreased significantly last year, from nine in the fourth quarter of 2004 to four in the fourth quarter of 2005.

No investment was made in the healthcare industry in the fourth quarter of 2005, in contrast with a solid performance in the first three quarters of the year.

Garry O'Rourke, senior manager at Ernst & Young Ireland, said the figures for the last quarter of 2005 were significantly reliant on a small number of large deals.

"As the Irish market is quite small, venture capital figures should be viewed in a yearly or longer term, rather than on a quarterly basis, to assess trends.

"2005 was a steady year for investment in the Irish market, with the overall amount invested showing an increase in comparison to 2004 and 2003. IT continues to be a strong performing area for Ireland, in contrast with its decline across Europe."

In Europe, the UK remains the most active country but deals were down 9 per cent and capital was down 11 per cent to €1.04 billion.

Ireland was 12th in the number of deals, equal with Spain and behind the Netherlands and Norway.

In terms of the amount raised, Ireland was in 10th place.