Venture capital investment surges in first quarter
Venture capital investment in Irish companies has increased dramatically in the first quarter of 2005, with the €75.4m invested more than twice the amount invested in the previous quarter.
The €75.4m first-quarter investment is almost half the total amount raised in the full year 2004, the quarterly Techpulse survey from corporate finance house Ion Equity shows.
The Techpulse survey also shows that there is a move towards larger deals while the involvement of international investors in the Irish venture capital market has become more pronounced with Intel Capital, Apax Partners, Cisco Systems. Amadeus Capital Partners and Polaris Ventures all involved in Irish investments in the first quarter of 2005.
The most active Irish investors in the quarter were ACT Venture Capital and Trinity Venture Capital while NTR plc and Kilsaran Concrete Products were involved in the single biggest deal – the €18m invested in broadband service provider Irish Broadband.
Three Irish companies – Corvil, Aepona and Irish Broadband - each raised more than €15m in venture capital funding in the first quarter while only one company managed to raise more than €15m in the full year 2004. In total, 12 companies raised funds in the first quarter, more than in any quarter since 2003, while the average deal size of €6.3m is 35% up on 2004.
Ion Equity Director Ulric Kenny said that the move towards larger venture capital deals is likely to continue and that the strong start in the first quarter is likely to continue into the second quarter.
“We are aware of a number of Irish companies who will shortly announce significant funding rounds. The market continues to be strong and we expect another good period for fundraising in the second quarter.”.
“It’s also encouraging to see the trend towards Irish companies receiving greater levels of investment. It helps level the playing field against US competitors who often receive $50m or $100m in venture capital backing,” Mr Kenny added.
“The fundraising market for quality Irish companies is very strong and significant competitive interest is driving some very strong valuations and keen funding terms. Venture capitalists are more active than they have been since 2000 and are keen to deploy their capital, particularly after their low levels of investment activity over the last 3 years”, Mr Kenny stated.
Internationally, venture capitalists are becoming much more active and are aggressively pursuing investment across borders. Some Irish venture capitalists are also prepared to invest overseas in pursuit of good opportunities, and in the first quarter of 2005, ACT Venture Capital led one of the biggest funding rounds in the UK – the $24 million investment in semiconductor company Frontier Silicon.
