Sharp fall off in Irish tech VC funding in H2 2011

While first half funding in 2011 rose 58pc over 2010 to €161.9m, the second half of 2011 saw a decline of 46pc to €112.5m.

Maurice Roche, chairman of the IVCA and partner in Delta Partners, said the decline was largely due to a pull back by overseas VC investors.

“We have serious concerns that Irish venture capital firms too will start to run short of funds in 2012,” he said. “This will place a major brake on the future expansion of Ireland’s indigenous tech sector. In particular start-ups that have received investment in recent years from the seed funds will have great difficulty raising additional capital.”

Regina Breheny, director general of the IVCA, noted that the Irish venture capital community continues to be the main source of funding for Irish high tech SMEs.

She said that since the onset of the credit crunch in 2008, 547 Irish SMEs had raised venture capital of €1.1bn. “These funds were raised almost exclusively by Irish VCs who during this period supported the creation of up to 20,000 jobs.”

She added that since 2008 Irish VCs had attracted over €450m of capital into Ireland.

The IVCA said 159 tech companies raised the 274.4m from investors last year.  This compares with €310.2m funds raised by 156 companies in 2010 and €288.1m raised by 139 firms in 2009.

Amounts raised ranged from €100,000 to €20m.

In 2011, 82 companies raised €104.9m, or 38pc of the overall figure, in early stage/seed investment. This compares with 63 companies and €53.6m (17pc of funds raised) in seed/early stage investment in 2010 and with 65 companies and €71.2m (25pc of funds raised) in 2009.