Ireland is a "hidden jewel" for global venture capitalists, according to Mr Bob Davis, founder of Lycos and currently a partner at Highland Capital Partners.

Having invested in Irish technology firm, Performix, he told delegates at the Irish Software Association's (ISA) annual conference that Highland Capital Partners saw potential to add to its Irish investment portfolio in the future.

Commenting on lessons from the internet bubble, Mr Davis said the pendulum had swung too far in the opposite direction. "Of course, original internet company valuations were off the wall. But the internet is the greatest communications vehicle the world has ever seen and we should recognise its potential without the hype of the past," he said.

In the current environment, successful Irish chief executives should concentrate on creating value, not looking to a rapid exit strategy though an IPO or trade sale to a multinational.

"CEOs should concentrate on building revenues and earnings. That way they will prosper, whether or not the market for IPOs or trade sales improves," he said.

The chairman of the ISA, Mr Billy Huggard, called on the incoming Government to work with the association to develop innovative ways of boosting Ireland's entrepreneurial culture.

"Changes made in the last Budget to BES [business expansion schemes] and seed fund capital schemes called for by the ISA have led to significantly increased start-up activity since the new year," said Mr Huggard.

He told conference delegates that Government policy had been a great success in attracting overseas multinational investment.

"We now need to put the same investment and creativity into encouraging indigenous start-ups," he said.

He also called on the financial services industry to be more accommodating in its approach to new businesses.

"It remains difficult for some start-ups, even with good management and realistic business plans, to obtain leasing facilities. This is a major disincentive to creating an entrepreneurial culture in Ireland," he said.