Irish SMEs raised €285 million from investors in 2013, up 6% on the previous year, according to the annual Irish Venture Capital Association VenturePulse survey.
In 2012 Irish SMEs raised €269m.
Over 95% of the funds in 2013 were raised by knowledge-based companies covering software, medical devices, pharma and biotech. “Venture capital is playing a vital role in fuelling the growth of Ireland’s indigenous technology sector,” says Mark Horgan, chairman, IVCA. “VC backed companies tend to grow faster, employ more graduates and generate higher levels of exports than other indigenous SMEs.”
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.
“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.”
Mr Keogh also said that Irish pension funds, which are valued at over €80 billion, 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, IVCA added 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 syndicates.
“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.”
She added that first round funding was 18% of funds raised compared to 20% 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.”
Main points from survey
The IVCA VenturePulse survey shows that Irish companies raised €284.9m from investors in 2013, despite the continuing global credit crunch. This compares with funds raised of €269m in the same period of 2012, an increase of 6%.
Total seed funds raised in 2013 is €51.6m (18% of total funds raised). This compares to €53.7m (20% of total funds raised) in 2012.