Irish venture capital firms do not expect their clients to float on public stock markets for at least two years, a new survey shows.

But despite the current poor economic climate, more private funding will be available to firms this year compared with last year, the survey, which was conducted by the Irish Venture Capital Association, shows.

The Venture Capital Outlook 2003 says 86 per cent of venture capital firms believe there will be no significant public flotations by companies until at least 2005.

"There is a general consensus in financial markets that an initial public offering of an Irish company this year is highly unlikely," concludes the survey.

A trade sale is seen as a more common exit strategy for firms in the domestic market. The survey also notes the current disenchantment with stock market quotes, which has led several firms to delist from public stock markets.

The survey says the outlook is positive for firms seeking funds as 78 per cent of venture firms plan to increase investment in 2003, compared with last year.

The survey concludes that the venture capital sector has not retreated to tending its existing client base but was actively seeking new investment. Some 78 per cent of venture capital firms surveyed said they would increase their investment in new projects in 2003, compared with last year.

More than half of the firms surveyed said the number of investment proposals they were receiving had decreased in the past year while a third said it had remained the same. But two-thirds of the firms surveyed said the quality of the proposals had improved.

The survey says almost three-quarters of firms are concerned about how the new Company Enforcement Act will affect venture capital directors who sit on boards of client firms. This Act mandates liquidators to apply to the High Court to place restrictions on directors of firms that go into liquidation regardless of the circumstances or actions of a director.

The association is concerned this could attach a negative stigma to its members, who typically sit on the board of several client firms.

The survey was conducted in February and March to gauge sentiment among members of the Irish Venture Capital Association, the representative body for the investment industry in the Republic and Northern Ireland.