Conor Lenihan (Dublin South West, Fianna Fail)

The availability of venture capital for start-up businesses is a very important issue. While my Department has addressed the issue of the availability of capital for early stage businesses in a number of ways as I will outline, there are certainly continuing challenges in relation to raising finance for new businesses. These include the fact that fewer people now have discretionary funds available for investment in early stage and other businesses due to the effect of the downturn on personal wealth. The raising of larger amounts of money for capital intensive projects is particularly difficult and requires greater success in getting overseas co-investment in Irish companies.

I am fully aware that a dynamic and healthy venture capital market is a prerequisite for the growth and development of high potential start-up companies in Ireland. Over the past 16 years, Enterprise Ireland has focused on stimulating venture capital funds in order to promote the availability of this important source of funding for companies that would have difficulty raising capital through traditional sources of finance. It has undertaken initiatives that have led to the creation and development of a vibrant Irish-based venture capital industry.

To date, Enterprise Ireland has been involved in three seed and venture capital programmes, through which support for venture capital funds has been undertaken by means of investment as a limited partner with other private investors on a pari passu basis. The management of these funds is in the hands of private sector venture capitalists who take investment decisions on a fully commercial basis.

Under the EU seed and venture capital measure for 1994 to 1999, some 15 separate venture capital initiatives were established, with €43.9 million committed under this programme. The first of these initiatives was launched in May 1996. Under the 2000 to 2006 programme, Enterprise Ireland committed €98 million to continue development of the venture capital market for small and medium-sized enterprises in Ireland. This programme committed capital to 15 funds.

The 2007 to 2012 seed and venture capital scheme was launched to promote the availability of funding for companies at both early and growth stages of development and to further develop the seed and venture capital industry in Ireland. Enterprise Ireland has committed to investing €175 million under this programme. Out of the overall allocation of €175 million, Enterprise Ireland has, to date, committed investment to ten funds. Of these, eight funds, with a total size of €525 million, have commenced operations. Two further funds with a total size of €150 million remain under negotiation.

I understand from data published by the Irish Venture Capital Association in its publication, Venture Pulse 2009, that in the first three quarters of 2009, approximately €220 million was invested by syndicates of investors, including Enterprise Ireland, in Irish small and medium-sized enterprises. Of the 61 investments made during that period, 57 were of a value of less than €10 million, representing a total of €120 million of the overall funds invested. A total of 23 of the 57 investments were in the range of €1.5 million to €10 million, totalling €94.7 million.

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