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Start-ups attract funding despite sluggish economy

Irish venture capital firms supported by Enterprise Ireland put €60 million into start-up companies in 2011, making more than 130 investments in 93 companies, according to the development body that helps indigenous companies.

The Seed and Venture Capital Programme Report for 2011 released on 20 July said that investment levels increased by 43 per cent on 2010, with funds flowing into hi-tech start-ups and companies with high export potential.

Development of the venture-funding sector in Ireland forms a part of the government’s Action Plan for Jobs, which contains policy objectives to revive the economy and deliver jobs. The hi-tech and export sectors in particular are being supported to develop the knowledge economy and improve the balance of trade.

Two large banks, Bank of Ireland and Allied Irish Banks, have introduced funds in tandem with the government, which has collaborated with about 40 private venture capital investors in recent years.

Jobs minister Richard Bruton said the report showed that the enterprise effort had delivered results, and the government would continue to support venture capital in pursuit of growth and jobs.

In a separate announcement, the government has opened a call to investment fund managers willing to co-invest in seed and venture capital funds. The state will provide €20m with a matching €20m expected from private sector investors. The money will be channelled through EI’s venture capital programme.

This is the third such call for expressions of interest under the programme, which has operated since 2007 and which will close after this round, the Department of Jobs, Enterprise and Innovation said in a statement on 25 July.

So far about €155m of the €175m earmarked by government for the 2007-12 programme has been committed to 11 seed and venture funds. These in turn have attracted private sector support, bringing to €636m the total under management for investment in early-stage companies.

Venture capital funds provide investment as well as access to advice and networks important to early-stage, high-potential companies, Bruton said at the announcement of the call.

“They are an essential element of the innovation system and mean that more high growth companies can receive the funding and backing they require to go out and achieve strong exporting results, creating jobs in Ireland,” he added.