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Venture capital funding up nearly IEP100 million Back  
Irish venture capital providers made investments of IEP139 million in 1999 in Irish companies, according to data released by the Irish Venture Capital Association in September. Of this, IEP70 million went to MBOs, dominated by one large transaction, IEP40 million for expansion capital and IEP23 million for early stage investment.

Venture capital funding was up nearly IEP100 million on the 1998 figure, with the number of companies receiving funds up from 72 to 128 in 1999.

The IEP55 million financing of the Clondalkin MBO in 1999 skewed the figures. Excluding that transaction, new venture capital funding was up 110 per cent last year.

The predominant sector for investment in 1999 was technology, with 59 per cent of companies and 37 per cent of value (excluding the Clondalkin transaction would bring the percentage of investment in the technology sector to 61 per cent).

Investments outside of technology and software were widely spread. The category with the next largest number of funded companies after technology’s ‘support services’ 75 companies was ‘engineering’, with seven companies receiving funding. Only two companies in the financial sector received venture capital funding in 1999, and these were categorised as ‘other financials. Similarly, only two ‘utilities’ received funding, while no funds were applied to oil exploration, leisure and hotels, breweries, pubs and restaurants or, unsurprisingly, tobacco companies.

The relatively small size of most investments was highlighted by the fact that over 75 per cent of transactions involved amounts of less than IR?1 million in 1999. There were 33 transactions involving over IEP1 million, only one of which was over the ?5 million mark, the Clondalkin MBO. But this still represented an increase from 1998 when there were only seven transactions over IEP1 million and 1997, when there were only five.

Nearly three quarters of investee companies were located in Leinster.

The report noted that ‘perhaps reflecting the developing nature of the Irish venture capital industry, relatively few divestments occurred in 1999, with no realisations by means of IPO and eight exits by way of trade sale’. There were 16 divestments by ‘other means’, which includes repurchase of shares by investee companies or by their promoters.

The first IVCA report was presented in association with Matheson Ormsby Prentice solicitors. Commenting, IVCA President John McInerney of Smurfit Venture Capital said ‘the activity levels reflect the dynamism of the emerging new economy in Ireland.’ He also paid tribute to the public sector bodies for making seed capital available under the Operational Programme for Industrial Development. MOP partner, Andrew Doyle, said that the trends were likely to continue and ‘augur well for the Irish economy’.

Further evidence of the bouyant Irish venture capital market was given by Tom Godfrey of IBI Corporate Finance at the first in a series of seminars called Money Trail. The seminars are being organised by the Irish Internet Assocation in conjunction with IBI Corporate Finance. ‘There is an unprecedent level of venture capital and private equity available for the right opportunities and the Irish market is still one of the most exciting markets for technology invetments in the world.’

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