It's three years since the dreams of a generation of young entrepreneurs dissolved with the collapse of the global technology market. Scores of start-ups have gone bust, forcing directors and staff out of work and bringing a hard dose of realism into a technology industry awash with cash.

But despite the inevitable fallout from the bursting of the dotcom bubble, entrepreneurship in the technology industry is alive and well, according to Ms Patricia McLister, manager of software and international services at Enterprise Ireland.

"We are getting about 30-40 inquiries from individuals interested in setting up businesses every month and, surprisingly, this hasn't really changed much in the past few years," she says. "In the software sector we provided funding worth €25.4 million to early-stage companies in 2003."

Many of the entrepreneurs seeking mentoring and financial support from Enterprise Ireland are people who have tried before and gone out of business. There is also a growth in entrepreneurs emerging from the multinational sector, says Ms McLister, who is bullish about opportunities in the software sector in the Republic.

Many entrepreneurs set up their own businesses when they have experienced career success with a larger multinational. Iona Technologies, one of the State's most successful software companies, has spun out more than 20 start-ups in its 13-year history.

This process is not always amicable, as Mr Annrai O'Toole, a co-founder of Iona Technologies, found out when he left the company in 2001 to set up software firm Cape Clear.

"In my case, I poached a senior guy in the US from Iona and things got ugly. But the whole incident is not the norm in the software business where executives tend to move around a lot.

"I think [when you are leaving a firm\] you have to be upfront and honest with the firm and not deceive people about your intentions," says Mr O'Toole, who has built Cape Clear into a multimillion euro revenue firm with a separate US headquarters.

One of the crucial elements in building a business is recruiting the right staff and building a team. You need someone to develop products, someone to sell products and a manager who can deal with compliance and recruitment, he says.

"Entrepreneurs should also ask questions about their own personal motivations... Just wanting to make money isn't the right justification for setting up a firm," says Mr O'Toole.

Mr Brian Long is another successful Irish entrepreneur who left a multinational, in this case DEC, to found chip-design firm Parthus Technologies.

Just a few years after the firm floated on the Nasdaq providing a windfall for some staff, there are signs that Parthus is producing a new generation of spin-offs.

Mr Niall O hEarcain and Mr Conor McAuliffe, two technical directors at Parthus, left in early 2002 to found Dublin-based Silansys. It was founded as a design services business that offers large semiconductor companies a range of design, test and application support for mixed, analog and digital integrated circuits.

"To a certain extent we have been through the start-up phase with Parthus... we have also done some work for Parthus," says Mr O hEarcain, who has 15 years' experience in the chip industry.

"It is useful to be able to call on senior guys such as Kevin Fielding or Brian Long for advice, who can often put us in touch with the right people. Networking is fairly crucial as ultimately business is about people."

Enterprise Ireland provided Silansys with mentor support - senior business people who give advice - and initial funding. The State agency provided the firm with €38,000 in feasibility funding to help it analyse the potential business opportunities in its sector.

Silansys has approached several venture capital (VC) firms about raising additional funding but will probably wait until it has developed a product that it is 110 per cent sure of before it raises funding, says Mr O hEarcain.

"Venture capital firms are not interested in pure services firms because they are not really scalable and, therefore, there is no upside for them," he said. "It is hard to say when is the right time to approach the VCs. You have to find the right idea, get some validation of the idea and have your intellectual property protected."

Attracting funding from the venture capital community has not been an easy task over the past three years. Dublin-based corporate finance house Ion Equity recently reported that investment in Irish technology and life science companies fell 44 per cent during 2003.

VC firms invested €154 million last year in Irish companies, significantly below the levels of investment recorded over the past four years.

"We raised a €90 million fund in June 2000 and, over the following year, did 10 deals, but for the following two-and-a-half years we have done very few," says Mr Frank Kenny of Delta Partners, one of the Republic's biggest venture capital firms.

But there are clear signs that the technology economy is improving, says Mr Kenny.

Delta says its client firms have received at least five unsolicited approaches to acquire, as big companies realise they have shed so many development staff they need to acquire to grow. It is also seeing experienced technology entrepreneurs getting back into the business after the downturn.

According to Mr Kenny, it has been particularly difficult to get seed funding for ideas in recent years. But Delta is now loosening its purse-strings and is preparing to make more investments in young Irish entrepreneurs.

Entrepreneurs making presentations to VCs should have clear ideas about what difference their products will make to customers and what competitors they will face. Management must be realistic about the resources they need to make their idea a success. They should be open to bringing in new experience, Mr Kenny says.

This is a crucially important point for first-time entrepreneurs, many of who find managing their finances hugely time-consuming and distracting.

"There is a lot of pressure and stress on the technical side to get things right but also on the business side... We found it better to outsource some functions," says Mr O hEarcain.

Silansys has hired OFM Solutions to take care of its financial functions. OFM, the brainchild of another former Parthus executive, Mr Ciarán Walsh, offers outsourced financial management services to technology firms.

"We believe it is often far better and cheaper for young technology firms to outsource their finance functions," says Mr Walsh. "We offer financial planning, assistance with accessing State and venture funding, accounting, tax and management expertise."

With signs that the technology sector is picking up, entrepreneurs are more likely to access funds and require OFM's services. This also increases the opportunities for Ireland to create the next Iona or Parthus.