Huge jump in venture capital investment

Irish firms have invested €29.77m in venture capital in the third quarter of 2007. according to the Quarterly European Venture Capital Report by Ernst & Young and Dow Jones VentureOne.

This represents an increase of €20.57m, up sharply from €9.2m invested during the same period in 2006.

The number of deals also increased from four in Q3 2006 to five in Q3 2007.

“Reflecting the trends in Europe, Irish venture capital investment in Q3 2007 has come from later stage investments and service-focused deals,” said Sinead Munnelly, transaction advisory services partner at Ernst & Young in Dublin.

“Late stage deals made up over 60% of Q3 investment. Factors that contributed to this substantial increase in investment include the lengthening time from a company’s initial venture capital funding to a M&A or IPO, requiring investors to fund operations for a longer period.”

There was also a substantial increase in the value of late deals. There were three late stage deals completed compared to one in Q2 2007 and no completed deals in Q3 2006.

These late deals raised €19.07m, a significant increase compared to €3.7m in Q2 2007.

In relation to the first and second rounds, there were two first round deals in Q3 2007, an increase from one in Q2 2007 and no completed deals in Q3 2006.

The amount invested in this round totalled €10.7m, a small decrease compared to €11.65m in Q2 2007.

The Irish healthcare sector in Ireland also experienced growth in the form of a single €4m deal in Q3 2007 after there had been no deals either in Q2 2007 or Q3 2006.

The IT sector remained strong with a total of four IT sector deals closed in Q3 2007, the same as Q3 2006 and up from three deals in Q2 2007.

The amount invested was €25.77m in Q3 2007, an increase from €15.80m in Q2 2007 and €9.2m in Q3 2006.

The most significant investment of Q3 2007 was made by Intune Networks, a provider of optoelectronics solutions, which completed a €14.77m deal in August 2007. Intune Networks is a Fiber optic Equipment & Photonics company based in Dublin.

Geographically, Ireland ranked 10th in the number of deals, ahead of Belgium and behind Denmark, and eighth in terms of the amount raised, behind Norway and ahead of Denmark.

There were two exits in Q3 2007 and no exits in Q2 2007.