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SMEs raise more venture funding but startups hit

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IVCA’s Regina Breheny

IVCA’s Regina Breheny

Colm Mahady / Fennells

IVCA’s Regina Breheny

Irish SMEs raised 35pc more venture capital funding year-on-year in the nine months to September 30, but the percentage of funding going to startups fell sharply, according to a new survey by the Irish Venture Capital Association (IVCA).

The survey of venture capital firms shows €314m was raised by SMEs in the period - compared to €233m in the same period in 2013 and €184.8m in 2012 - but just 5pc of the total went to startups.

In the first nine months of 2013 startups got 21pc of the total -€48.5m - and in 2012 they got 18.6pc - €34.2m.

IVCA director general Regina Breheny general said seed funds supported by the banking sector and Enterprise Ireland need to be renewed if startups are to get more funding.

"The seed funds are actually running out of money...they would have a life of four to five years and most of them are now coming to the end of that life," Ms Breheny told the Irish Independent.

The issue will be how much money will be available and where it will come from at the end of the day. I think the banks have had a good experience so far, they do seem to be relatively comfortable with the expertise that the VCs (venture capital firms) have shown in terms of investing the money and they may well step up to the plate again." she added,

"In the meantime of course the main VCs are fundraising so that kind of round needs to be got out of the way first and we're fairly confident that will come to fruition." Telecoms software company Accuris, medical device maker Neuravi and business software firm Yellow Schedule were among companies who got money from venture capital firms in the first nine months of this year.

Enterprise Ireland (EI) has committed €99.5m to a number of venture capital funds under its 'Seed and Venture Capital Scheme 2013-2018.'

Those firms will target investment in the ICT and life sciences sectors.

A total of €175m has been committed to the scheme by the government, and EI is currently considering what kinds of businesses and sectors should be targeted under the rest of the scheme.

EI is expected to seek more expressions of interest from venture capital funds next year.

Jobs Minister Richard Bruton has said the scheme "will help support the next generation of Irish-based seed and venture funds and increase the availability of funds...to the fast-growing businesses that will create the jobs we need."

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