Business Irish

Thursday 26 April 2018

Start-up cash still available despite Facebook flop

Peter Flanagan

Peter Flanagan

DESPITE the perceived failure of Facebook's flotation last month, there is still significant funding available for Irish start-ups, according to one of the biggest venture capitalists in the country.

Brian Caulfield of investment firm DFJ Esprit said Facebook's "failure" could hurt the investment landscape in the US but would have minimal effect on the Irish sector.

"Facebook is something of an outlier in the technology area because it went public so late in its development.

"Most businesses that get that big will have been bought or floated on a stock exchange long before it gets to the sort of valuations we have seen with Facebook," he said.

Helpful

"Obviously it's not helpful to have had the IPO do as badly as it's done for investors who got in last month, but you have to remember most of the VC firms who put money into Facebook made a huge profit.

"The difficulty for the business here is that pension firms and the like who invest in VC firms, who in turn invest in start-ups, may look at Facebook and forget the huge growth it had before the IPO," he added.

Facebook's share price closed on Friday at $27.10 (€21.67) -- about 29pc below the $38 it started trading at when it went public a month ago.

That collapse in performance prompted the head of "Y Combinator" a huge Silicon Valley start-up investor to write to his client companies warning it would be more difficult to gain investment in the short term.

Irish Independent

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