The Republic now puts half of all private investment into technology companies, with most coming from venture capital deals, according to a new report on European technology investment from PricewaterhouseCoopers, Money for Growth.
"There are very good venture capitalists in Ireland and it's very competitive in terms of funds," said Mr Joe Tynan, a consultant with the technology group at PricewaterhouseCoopers Ireland. Ireland ranks third in Europe in the percentage - but not the total amount - of overall funds it places in technology investments, following Switzerland, at 60 per cent, and Belgium, at 59 per cent.
While the latter countries have not been strongly associated with the technology industry, Mr Tynan said there was considerable Internet activity around Ghent in Belgium, and technology development in Geneva and Lausanne in Switzerland.
Overall, European investment in technology hit a record €6.8 billion (£5.4 billion) in 1999, an expansion of 70 per cent over 1998, the report says. Some 5,000 investments were made with the average deal size at €1.4 million, compared to €1.3 million in 1998. More than €1.2 billion went into e-commerce related investments, €3 billion was for computer-related investments (a broad category that includes hardware, software, services and semiconductors), communications received €1.3 billion, and Internet technology projects picked up €1.1 billion.
Mr Tynan noted that most of the money - three-fourths of the total amount - goes into early, first and second round funding.
Of 17 European countries surveyed, Britain led in total technology-related investment, at €2.2 billion or 32 per cent of the total invested. Germany came in second, with €1.4 billion or 20 per cent of total share. France was third, at €1 billion, and the Netherlands was fourth, at €0.5 billion. Ireland comes 12th, with €61.6 million, just behind Finland, at €88.2 million, Spain, at €126.5 million, and Switzerland, at €164.8 million. Of the Irish total, nearly all is venture capital investment, €60.4 million.
E-commerce is a new category in the survey, reflecting the growth of Internet-related business. About 650 deals were made in 500 companies, with an average deal size of €1.9 million. Leading the country table in e-commerce investments is France at 28.1 per cent, followed by Britain (19.4 per cent), the Netherlands (11.2 per cent), and Sweden (10.6 per cent). Germany, which has been touted as an e-commerce leader, comes fifth at 7.3 per cent. The Republic only put 2.7 per cent of funds into e-commerce, while Iceland and Greece made no investments at all in this area.
"The European venture capital market has been quite sleepy in past years but it really took off in 1999," said Mr Tynan. But he warned that deal sizes were still very small compared to the US, where the average deal is €9.03 million. And, at €30.4 billion - 91 per cent of total venture capital investment - US technology and Internet-related investments "dwarfed" Europe, he said.
