Almost 400 indigenous companies benefited from venture capital financing of more than £376 million (€477 million) in the four years to December 31st, 2000, according to an Irish Venture Capital Association survey of its members.

The Report on Venture Capital Activity 2000 shows investment in 2000 of £164 million in 144 companies, up from £140 million in 128 companies in 1999. But the chairman of the association, Mr Conor O'Connor, predicted a slowdown in investment this year.

"Investment in technology companies accounted for some 75 per cent of investment last year. With the changed climate for technology investment we expect a reduction in overall venture capital investment in 2001."

The report is based on a 100 per cent response from the association's members but does not include investments made by the overseas offices of Irish venture capital firms, or the activity of non-members such as overseas venture capitalists, investment banks and private investors. It is thought that its membership accounts for significantly in excess of 50 per cent of total investment. No figure for total investment from all sources is available, however.

Mr O'Connor said the "over-heated" nature of the capital markets was counterproductive for both high-tech companies and investors. "A more balanced and realistic market provides better opportunities for venture capitalists and indigenous IT companies. Our members invest equity capital for the long term and I have no doubt they will continue to back good management teams with realistic proposals in this sector."

More "early stage" companies were backed in 2000 than in any previous year, with 71 per cent of all companies receiving investments of less than £1 million. There were 14 transactions in the £2.5 million to £5 million category, compared to nine in 1999. There were five transactions in the £5 million to £10 million category in 2000, compared to none in previous years.

Mr Andrew Doyle, of Matheson Ormsby Prentice, which produced the report together with the association, said the fourfold increase in venture capital funding since 1997 augured well for enterprises seeking funding.

Mr Billy Huggard, chairman of the Irish Software Association, said its calculation was that more than £150 million had been invested in Irish technology companies this year, more than was invested in the technology sector as a whole in 1999.