Disclosed venture capital investment in Irish technology firms was €25.5 million in the first quarter of 2004, an increase of 27.5 per cent on the previous quarter, according to a survey by corporate finance firm Ion Equity.

However, investment was down 43 per cent on the first quarter of 2003.

The rise in disclosed investment implies a resurgence for the Irish tech sector, according to Mr Neil O'Leary, chief executive of Ion Equity.

"In January, we suggested that Irish tech funding had reached a floor at €20 million per quarter," Mr O'Leary said. "We can now see the early signs of a recovery in Ireland, although lagging the more substantial uplift across Europe and the US."

The largest investment in a technology company in the first quarter was €4.8 million for Mobile Cohesion, a mobile messaging software firm. Accel Partners and Cross Atlantic Capital Partners provided the funding.

Semiconductor firm Magnetic Solutions and telecommunications software firm AePona each received €4 million in funding.

The survey reported 11 fundraisings in the first quarter of 2004, with an average investment of €2.3 million. This compares with 16 fundraisings in the first quarter of 2003, at an average of €2.8 million per investment.

Technology investment in the Republic has declined substantially in recent years, from €297 million in 2001 to €152 million in 2002 before slumping to just €38 million in 2003.

Nearly all of last year's activity came from four substantial investments: €11.5 million in AePona, €10.2 million in network-equipment maker Corvil Networks; €10 million in e-payments firm Valista; and €4.5 million in broadband provider Eblana Photonics.

Mr O'Leary said he believed investment in technology firms would increase in the second quarter of 2004 and continue to climb for the rest of the year.

Two companies have already been awarded significant funding in the second quarter, he said.

Software group Performix received $10 million (€8.4 million) from Atlas, while Web Reservations International, an online booking software company, has received an undisclosed amount from Summit Partners.

Mr O'Leary pointed to the acquisition of Dublin-based banking software company Eontech for an estimated $100 million by Siebel Systems as an example of the Republic's technology firms' "ability to create significant software companies despite difficult trading conditions".

"Money is in plentiful supply with domestic and international investors hoping to see a new wave of emerging Irish technology companies," Mr O'Leary concluded.