Small Increase In VC Investment
Investors backed Irish SMEs to the tune of €285m in 2013, up 6% on 2012, according to the Irish Venture Capital Association's (IVCA) annual VenturePulse survey.
However, Stephen Keogh, a corporate partner in William Fry, which acted as legal adviser in over 40 of the funding rounds during the year, expressed concern that activity levels were beginning to slow. Over 95% of the funds in 2013 were raised by knowledge-based companies covering software, medical devices, pharma and biotech.
Says Keogh: “Irish VC firms are entering the end of the investment term within their existing funds. New capital will need to be raised from the private sector to fund SMEs into the future.” He added that Irish pension funds, which are valued at over €80bn, should consider venture capital investment as a small part of a diversified investment strategy.
“Because of low returns from cash and bonds, pension funds are seeking alternative investments. Right now, as an asset class, venture capital is offering a good investment opportunity. IPOs are on the increase and exits are back on the agenda, with Tier 1 global tech firms willing to spend their cash on acquiring VC-backed tech companies.”
Regina Breheny, director general of IVCA, says that the Irish venture capital community continues to be the main source of funding for Irish SMEs. “In 2013, funds raised from international players was €119m, an increase of 22% on 2012. Since the onset of the credit crunch in 2008, over €650m of international funds has been leveraged by Irish VCs into indigenous SMEs,” adds.
Breheny also points out that first-round funding amounted to 18% of the funds raised in 2013, a slight drop from the 20% seen in 2012. “Seed funds supported by the banking sector and EI's Seed & Venture Capital Programme of 2006-2012 are close to being fully invested. These funds will need to be renewed if entrepreneurs are to be supported as actively as in the last five years,” says Breheny. (19/02/14)