Act Venture Capital has approximately 15 technology companies in its investment portfolio and this figure is set to rise, as it invests £80 million (€100 million) in firms over the next four years, according to its managing director, Mr Niall Carroll.

Between now and Christmas, Mr Carroll says, ACT will complete another four deals, involving investments in technology companies. It has just completed raising the £80 million fund, the first such initiative since 1994 when it put together £50 million for investment in private companies.

However, ACT, an independent venture capital company, established five years ago, is not eschewing the more traditional investments, according to Mr Carroll. "It's just the way they are coming in," he says. The company currently has investments in 30 companies.

Together with the eight-strong team at ACT, which claims to have around 25 per cent of the venture capital market in Ireland, Mr Carroll will be investing £500,000£2 million tranches, sometimes more, in private companies over the next four years. The money has been committed by various financial institutions and pension funds, including AIB Investment Managers, Ulster Bank Investment Managers, Irish Life and Bank of Ireland Asset Management and a number of overseas investors.

Mr Carroll says the number of overseas investors in the fund demonstrates that there is very significant support for Irish firms from outside sources who believe that these companies provide strong growth opportunities.

Mr Carroll says ACT takes "an active involvement" in the companies in which it invests. It usually acquires a 25-30 per cent stake and normally appoints a non-executive director to the board.

"We are not there to be watchdogs," he says. "We are there to give a hand on strategy, to help develop international acquisitions."

Mr Carroll says international experience is particularly important for Irish companies.

"Irish firms have to internationalise much earlier in life than their counterparts in the UK or the US," he says. "This is because they [US or UK firms] can become quite big in their own countries, before having to go abroad."

He says US and British companies are very aggressive and very good and the necessity "to become international" brings its own challenges. "Until recently Irish companies didn't quite see the significance of the challenge."

That said, Mr Carroll points out that Irish firms are "proportionally the second biggest buyer of overseas firms in the world, after Britain".

"All you have to do is look at the list of publicly-quoted companies to see that they are all making, or have made, acquisitions overseas."

There is no shortage of funding available for projects, he says. "There are always more funds than projects in which to invest."

Five years ago, he says, there were three venture capital funds, now there are around 15. Of these, some such as Hibernia and ICC have stand-alone funds, separate from their main funds.

ACT has been involved in a number of well-known buyouts, including Lifestyle Sports (an £18 million management buyout), Belfast Airport and the Connacht Court Group which was sold for £28.25 million last year. ACT got £7.6 million back for its £2.6 million investment in Connacht in 1996.

Current ACT investments include stakes in TV3, BCO Technologies and Piercom.

Mr Carroll admits that financial institutions and pension funds take a cautious approach to investing. They set aside a proportion of money for investment in the traditionally more high-risk private company sector.

He maintains that venture capital funds always beat the stock market on returns. ACT aims for a 25 per cent return per annum on its investment over a 10-year period.

"Its only right that we should be able to make such returns," he says, "we do a lot of research and we should know what we are doing".

The company spends two to six months researching an investment, its market opportunities and the strength of the potential investee's management team before deciding whether to proceed. Mr Carroll says all ACT executives have spent time in the private sector and have expertise and knowledge in technology, management consulting, accountancy and finance. This, he says, enables them to research and analyse investment opportunities.

The company has had some notable successes regarding investment returns, including its stake in Belfast Airport, a £32.7 million sterling management buyout which was sold two years later for £107 million. Fifty per cent of the company was bought by institutional investors (ACT had about 3 per cent), with the management team getting 50 per cent for £300,000. The sale caused considerable controversy at the time.

Mr Carroll says nobody could have foreseen that the company would be bought out so quickly and that it was British government policy at the time to encourage management buyouts. He admits that like any venture capital company, ACT has also had its share of failures, including one Northern Ireland company where six months after investing £350,000, it realised the investment was lost. However, there is considerable pressure on ACT to get it right. "We have to because if a private company doesn't do well, our shares are dead in the water. Nobody will want to buy them."

Mr Carroll denies that venture capital companies put pressure on private firms to go public so that they can realise their investments. "The companies only go public if they want to. A lot of companies change hands privately. We see our investments over a four to six year period [before realising them], but there are no hard and fast rules."