Irish
Venture capital investment in Irish technology companies rose in Q3 2006 but expected not to exceed €200 million for full year
By Finfacts Team
Oct 13, 2006, 10:40

• Venture capital funding in third quarter of €53.9 million more than double the level of a year ago

• Broadband and semiconductors companies the main focus of investment

• €20 million investment in Digiweb by Whelan family biggest deal of the quarter

• Full-year investment likely to be same as 2005 as big VC funds switch priority to raising new funds

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In September, Irish telco Digiweb announced that it had concluded a €20m funding round in conjunction with the Moritz Group, an investment development firm that is active in Ireland and Central Europe. However, property wins most times as an investment choice. Bank of Ireland Private Banking says that €30 billion has been invested in commercial property by Irish investors in the period 2001-2005

Venture capital investment in Irish technology companies has risen dramatically in the third quarter of 2006 with the €53.9 million invested in 15 different companies more than double the investment in the same period in 2005, according to the latest Techpulse survey from corporate finance specialists Ion Equity. 

Ion Equity director Dr David Fewer said: “This is a very high level of investment in what is traditionally one of the slowest periods for the year and the 15 investments means that third quarter 2006 has been the most active quarters for venture capital investment for more than three years”. He added that the third quarter figure is also 13% higher than second quarter 2006, traditionally a much more active quarter.

Dr Fewer said that activity in the third quarter was driven by two factors – non-traditional technology investors continuing to support broadband service providers and a significant increase in the number of investments in semiconductor companies. The single biggest funding was the €20 million investment in Digiweb by Moritz Holdings, the holding company for the Whelan family which owns Maplewood Homes and which is also involved in a number of international property investments. 

The investment by Moritz contrasts with recent developments at Irish Broadband, which has received more than €50 million in investment over the years from NTR plc. NTR has already stated that Irish Broadband is no longer a part of its core business and is reportedly interested in selling its stake for €60 million.

In the semiconductor sector, there were investments in Duolog, Redmere, Powervation, Dajeil and one undisclosed company varying in scale from €1 million to €5 million. “This could be indicative of a partial revival of the sector in Ireland as there were only four semiconductor deals completed in the previous 18 months,” Dr Fewer said. 

Another noteworthy deal was an early stage €500,000 investment in Nubiq by Enterprise Ireland and eTen. Nubiq is one of a number of Irish companies seeking to establish social networking and communities in the mobile environment. “They are looking to follow the success of companies in the internet space such as MySpace in the US and Friends Friends Reunited in the UK which were sold over the past 18 months for a combined value of over $800 million,” Dr Fewer said.

Ion Equity Director David Fewer

Dr Fewer warned, however, that while the level of funding in the third quarter was very positive, it is unlikely to set a pattern and that total venture capital investment this year is likely to be much the same as last year, when €200 million was raised.

“The major Irish funds such as ACT, Delta and Trinity are all reportedly coming to the end of their current funds and are likely to reduce new deal investment activity as they set about raising fresh funding - this will undoubtedly have an effect on the overall level of investment over the coming quarters,” he stated.