2006 venture capital funding down slightly on previous year to 192 million.
VC activity likely to reduce during 2007 as major Irish investors raises new investment capital
International investors likely to remain active investors in Irish technology sector
|Barry Maloney, former CEO of Esat Digifone , on left, with colleagues at Benchmark Capital Europe|
Venture capital investment in Irish companies in 2006 amounted to more than 192 million invested in 52 enterprises, according to the latest Techpulse survey from corporate finance specialists Ion Equity. But the coming year is likely to see a reduction in investment as the major Irish venture capital funds devote more resources to raising new capital for investment, Ion Equity director, David Fewer, stated.
Venture capital investment amounted to 2.4% of the 8 billion Irish investors ploughed into overseas commercial property in 2006.
Fewer said that while the 192 million invested in 2006 is only a slight reduction on the 2005 figure of 198 million and is well ahead of the 2003 and 2004 funding figures, the three big Irish venture capital funds ACT, Delta and Trinity led only eight deals compared to 16 in 2005.
This reflects the fact that the three big Irish VC funds have reached the end of their current funds and are now in the process of raising fresh capital for new funds, Fewer said, adding that as these fundraisings will not be completed until later this year, overall venture capital investment is unlikely to return to more normal levels until the late 2007 or early 2008.
However, while the big domestic funds reduced their venture capital activity in 2006, a new trend emerged last year significant venture capital investment by non-traditional investors such as Kilsaran Concrete, NTR, Moritz Holdings (the investment company for the Maplewood Homes Whelan family), Redstone Capital and FF&P. These non-traditional players more than trebled their Irish investments to 65 million in 2006 and more than compensated for the 40 million fall-off in investment from the three major Irish venture capital funds.
Investment from international investors is likely to remain strong in 2007 although investment from the non-traditional sectors is more difficult to predict. After this years relative lull, we would expect venture capital in 2008 to return to the levels of last year, Fewer stated.
The biggest single fundraising was the 25 million invested in Irish Broadband by Irish-based Kilsaran Concrete and NTR. International investors remain an important contributor to Irish venture capital funding leading rounds totalling 69 million during 2006, down slightly from 2005. The largest single international investment was the 20 million investment in 3V by Atlas Ventures and Benchmark Capital. Both Atlas and Benchmark have raised more than $500 million in funds in the past 18 months.
Tier-1 venture firm Benchmark Capital, where former Esat Digifone CEO Barry Maloney is a General Partner, is one of the most active investors in the Irish technology sector with investments in Openet, Alphyra, Globeforce, Innerworkings and NewBay Software. Benchmark was one of the early investors in eBay. The past year also saw the Canadian group Celtic House Investment Partners make their debuts in the Irish venture capital market.
In terms of sector concentration, telecoms remains the most active with three of the four largest deals worth a cumulative 59 million. There was also renewed activity in the semiconductor sector with seven fundraisings compared to three in 2005.
In contrast to the level of venture capital investment in Irish business, property consultants CB Richard Ellis on Monday said that the commercial property investment in Europe was worth 230 billion overall last year, up 40% on 2005, with Irish investors accounting for 11 billion - 3 billion of this was spent on domestic deals.