Friday, 10 January 2014

Irish Venture Capital up by 26%

The Irish Venture Capital Association (IVCA) has contradicted a report in this week’s New York Times which claims that VC investment fell in Ireland in the first nine months of 2013*.

Official data from the IVCA says that on the contrary, Irish SMEs raised €233m to end September 2013, an increase of 26% on the same period in 2012.  The IVCA says that seed/early stage funding increased by 41% in this period.

This contradicts The New York Times report, apparently based on data supplied by DJX VentureSource, which said “In the first nine months of 2013, the latest figures available, the country’s fledgling companies received around a combined $65 million (€47.6m) of venture capital investment, a 28 per cent drop compared with the same period a year earlier”.

“It is disappointing that the Irish VC industry is reflected in this manner. The period to end September was a tremendous performance, particularly against a backdrop of significant volatility in international markets. The IVCA VenturePulse is posted on the IVCA website,” commented Regina Breheny, Director General of the IVCA.

The IVCA VenturePulse survey in association with William Fry finds that first round funding was 21% of funds raised compared to 19% in 2012. However, IVCA chairman Mark Horgan of Atlantic Bridge warned that the 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,” he said.

Regina Breheny said that the Irish venture capital community continues to be the main source of funding for Irish innovative SMEs both through direct investment and as the local lead investor for international syndicate investors.

“Where deals are syndicated, every €1 invested by an Irish VC attracts further additional investment of €3 from international investors. Since the onset of the credit crunch in 2008, approximately 850 Irish SMEs raised venture capital of €2bn almost exclusively by Irish VC fund managers.”

She said that this investment had supported the creation of up to 20,000 jobs; attracted over €450m of capital into Ireland and geared up the State’s investment through the Seed & Venture Capital Programme by almost seven times.

Irish companies raised €232.6m from investors in the nine months to end September 2013, despite the continuing global credit crunch. This compares with funds raised of €184.8m in the same period of 2012, an increase of 26%.
In terms of sectors, at €70m Pharma/Biotech/Medical Devices accounted for 30% of funds raised compared to €34m, 19% of funds raised in the same period of 2012. Investment in the medical space reflects the strong growth in the cluster of device companies in Ireland. The balance of €163m, 70% of the total, was raised by Tech companies, this compares to €151m and 81% in 2012.

Total seed investment in Irish companies in the nine months to end September 2013 is €48.5m (21% of total funds invested). This compares to €34.2m (18.6% of total funds invested) in the same period in 2012, representing a 41% increase year on year.