IRISH owned firms will need almost £120 million in the next three years, but Irish pension funds have committed themselves to investing just £50 million in venture capital from 1994-1999, a new survey has found.

The survey shows that a significant number of Irish firms are finding it difficult to raise capital. It reveals the greatest need is in the £50,000 to £500,000 range and those most affected are small firms.

The survey, carried out last year by Deloitte & Touche, reveals that more than three quarters of those who need money now consider that raising it will be difficult.

Commenting on the findings yesterday, the Minister for Enterprise and Employment, Mr Bruton, said financial institutions need to take a greater risk in partnerships with private sector firms who need venture funding.

The survey shows that "private sourcing" and the BES are the most important equity sources for Irish manufacturing and international services industry, accounting for 75 per cent of equity sources.

Venture capital accounted for just 10 per cent of equity sources.

More than one quarter of firms said they had experienced an equity shortage in the past three years. They said it had a "negative impact" on the growth and expansion of their business.

Almost half of the long term funding needs of firms is provided from retained earnings and reserves. "This highlights the importance of the 10 per cent tax rate as a funding mechanism for indigenous industry," the survey says.

It found that firms with fewer than 10 employees have a lower success rate in raising monies.

"Long term borrowings at 14 per cent indicates that bank finance plays a much smaller role in the funding of manufacturing industry than share capital and retained earnings/reserves.

According to Deloitte & Touche firms surveyed require about £34 million within the next year and £80 million within the next three years.

The main reasons for the difficulties in raising equity cited by the firms were:

. small firms are unattractive to investors

. profit levels are low

. some companies are regarded as having insufficient security/asset backing.

The survey was responded to by 472 of the 951 firms who were sent questionnaires, representing a 50 per cent response rate.