So-called "knowledge-based companies" dominate the Irish venture capital (VC) market, absorbing 95pc of new investment.
Irish small and medium enterprises secured €285m of venture capital investment last year, up 6pc on 2012, according to the Irish Venture Capital Association (IVCA) VenturePulse survey published today.
Of that, €270m was raised by so-called "knowledge-based companies" active in the software, medical devices, pharma and biotech sectors.
"Venture capital is playing a vital role in fuelling the growth of Ireland's indigenous technology sector," according to Mark Horgan, chairman, IVCA.
VC backed companies grow faster, employ more graduates and generate more exports than other domestic start-ups, he said.
But Stephen Keogh, a partner at law firm William Fry said activity in the sector is slowing down. New funds need to be raised to replace capital previously raised that is now coming to the end of fixed investment terms, he said.
He said Irish pension funds, valued at over €80bn, should consider venture capital to widen their mix of investments away from low yielding cash and bonds.
Regina Breheny, director general of the IVCA, said the domestic venture capital community is the main source of funding for innovative SMEs here, both as direct investors and as the local lead investor where a venture is backed by an international syndicate.
In the last 10 years, Irish venture capital houses have invested €1bn in companies here, and helped bring in a further €1bn into the economy through syndicated deals, according to the IVCA.