Enterprise Ireland invested €28.5 million last year in venture capital for small to medium "growth-orientated" enterprises, bringing to €113.3 million the amount advanced under the investment scheme with the private sector, which has been running since 1994.

The venture capital scheme now plans to continue providing seed capital to new and developing Irish groups, with a further €95 million to be invested up to 2006.

Of the €113.3 million invested in the first phase of the scheme, €32.2 million has been returned, of which half belongs to Enterprise Ireland and half to the private sector. The Enterprise Ireland share of the returns has been earmarked for re-investment.

The scheme involves Enterprise Ireland working in partnership with the private sector to provide funds for new and developing enterprises. Enterprise Ireland is permitted to invest no more than 50 per cent to a fund, with the private sector providing the remainder. The funds are then given to fund managers to invest in emerging companies.

In Enterprise Ireland's 2001 Report on the Seed and Venture Capital Measure of the Operational Programme for Industrial Development 1994-1999, released yesterday, it was revealed that 71 per cent of the investment between 1994 and 1999 was in software-related projects. There are currently 15 Enterprise Ireland funds in operation in the software, manufacturing, communications food, engineering and life science sectors.

Around 120 companies have been supported under the scheme so far. Employment levels of companies in the portfolio at the end of 2001 was 3,269, compared with 1,365 at the time of the initial investments.

Mr Denis Murnane, manager of equity and venture capital at Enterprise Ireland, said it was very difficult to assess the value of his organisation's original investment. However, he added the monies made available had been central to the development of many Irish firms.

"We would stress that we are a development agency in this for the long haul and to help companies deliver over a long period of time... rather than thinking in terms of instant or quick gains," he said.

He added it was significant that the scheme had returned €32 million at a time of difficulty for many high-tech industries and when some listed companies had seen their share prices fall by up to 90 per cent.