Venture capital funding to SMEs hits €400m

Venture capital funding to SMEs rose over 40% to €401m last year, the highest level seen for 10 years.

More than 80% of monies raised went towards funding company expansion, according to the annual VenturePulse survey from the Irish Venture Capital Association.

The €401m raised compares to €285m in 2013 and 13% of the 2014 pot was raised abroad (mainly from Silicon Valley) by five Irish firms.

“The growing ability of indigenous firms to raise investment in Silicon Valley is a tremendous validation of Irish technology and reflects a growing confidence among Irish entrepreneurs,” said association director general Regina Breheny.

However, the Irish venture capital community continues to be the main source of funding for innovative SMEs, through direct investment and as the local lead investor for international syndicates, which invested €200m last year.

Meanwhile, first-round seed funding recovered in the fourth quarter of 2014, to deliver annualised growth of 31%. However, according to Stephen Keogh – corporate partner at William Fry – bank and Enterprise Ireland-supported seed funds, currently in play, are close to being fully invested.

“The importance of seed and early-stage funding cannot be overestimated. We need to back promising early stage start-ups in order to build a pipeline of successful Irish firms.

“While foreign direct investment makes a valuable contribution to the Irish economy, it is increasingly mobile and it is important that we don’t become over-dependent on it,” he added.

According to the association, since the onset of the financial downturn in 2008, more than 1,000 SMEs have raised €2.1bn via venture capital funds.

Last year’s investments supported the creation of nearly 20,000 jobs.

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