Technology firm Cape Clear Software, which has appointed two founder directors of Iona Technologies, Mr Annrai O'Toole and Mr Colin Newman, to key positions, intends to raise substantial funding in the new year.

Mr David Clarke, Cape Clear's chief executive, said yesterday the company - which develops software to enable businesses integrate their systems on the Internet - would aim to attract strategic international investors to allow it to build a US presence.

He said this would be in addition to private investments made recently by Mr Annrai O'Toole, Mr Colin Newman and Iona Technologies.

The scale of these investments has not been disclosed.

The two founding directors of Iona joined the company on Friday.

Mr O'Toole has been appointed executive chairman and Mr Newman head of marketing.

Mr O'Toole, a former chief technology officer with Iona, will assume responsibility for the next generation of Cape Clear products.

Cape Clear is a provider of XML (extensible mark-up language) technology for business-to-business applications.

This technology lets businesses integrate systems across the Web and complements Iona's core technology.

Mr Barry Morris, chief executive of Iona, said last night Iona invested in the firm to "further cement the alliance" between the two companies.

He said it was "completely conceivable" Iona would take over the firm if it succeeded in building more value during the following 18-24 months.

Iona has appointed another co-founder, Mr Sean Baker, as its chief technology officer.

Cape Clear was founded by three senior executives of Iona last year and completed its first round of $2 million (€2.3 million) funding in April 2000.