Comments on: Venture Capital in Crisis

By: coclarity » Maybe this recession is a good thing after all

coclarity » Maybe this recession is a good thing after all — Tue, 23 Dec 2008 12:32:59 +0000

[...] Sometimes the best part of these kinds of seminars are the discussions with other attendees that happen afterwards. This is where the silverish lining emerged. Some people believed while the VCs are becoming more cautious they will still do deals albiet less deals and reduce the reduce the average investment. That might put them into the investment range of many of the Web/Software companies who are looking for €200-400k investments. This class of companies have been in a bit of an investment vaccum recently as commented by Fergus Burns in Joe Drumgoole’s post about VCs in crisis. [...]

By: Web 2.0 Ireland » Blog Archive » Venture Funding in Ireland… some discussions

Fri, 28 Nov 2008 14:23:23 +0000

[...] Joe Drumgoole covers venture capital in crisis [...]

By: Shane Mc Allister

Shane Mc Allister — Fri, 14 Nov 2008 22:53:21 +0000

Great post Joe,

What really gets me is the EI money sitting in a government account, fully committed to private third party Irish VC’s (ok, one Public one – but they like buying hotels now), who now won’t be using this money ‘cos the LP’s won’t follow. I know it’s venture funds, and as such (and as Fergus rightly points out) applicable to only a small group of potential suitors, but if they changed the game to a philanthropic, “risk it for a biscuit” approach, who knows how many Polldaddy’s, Auctomatic’s etc might gestate…

Just my tuppence…

By: Fergus Burns

Fergus Burns — Thu, 13 Nov 2008 14:56:21 +0000

Hi Joe

Working on some analysis on funding [and its scary] – the IVCA figures are misleading – but it looks like 5% of Irish ventures are VC backed – rest are angel/BES/none…

You only have to look at the recent successful companies/exits – not a lot of them had Irish VC monies

talk soon
fergus

By: Joe

Joe — Thu, 13 Nov 2008 09:53:38 +0000

Yes, and the 5% number is a problem in itself (BTW: How did you come about that calcuation).

The AIB Seed Capital Fund is trying to address that market in a meaningful way, but suffers a little from still acting like a VC despite investing seed round amounts (I think their cap is 250k). The problem with being VC like is you end up paying VC legal fees. So suddenly 5% of your capital is up in smoke to a legal firm before you’ve even cashed the cheque.

I’ve said it before, EI needs to be more aggresive in this space and take a more hands on approach to allocating capital to seed funds and controlling how that money is invested. There dump of cash into the Irish VC market has so far had zero impact on the amount of funding that is flowing into early stage companies.

By: Fergus Burns

Fergus Burns — Thu, 13 Nov 2008 09:44:39 +0000

Great post Joe – but it only affects less than 5% of Irish entrepreneurs

Some funds will be ok [those with decent track records] – but i would anticipate a lot of the Irish VCs [who have financial institutions as LPs] will be under the kosh. Perhaps we will see a secondary market appear in Ireland @ LPs/VCs [would be one way to clean up the potential mess].

See http://tinyurl.com/6dfcy4 for good commentary on secondary markets.

Btw, did you see that BDO are raising monies for VC funds – http://tinyurl.com/5eqwnf – surely it would be more wiser to have a “First Round”/”SoftTechVC” fund based in Ireland.