Investment in Irish technology companies declined 20 per cent in the second quarter from the year-earlier period as fewer start-up companies succeeded in winning funding and several of the large Irish investors neared the end of their funds. Over the course of the year, the total spend is unlikely to reach the €200 million achieved in 2005, Ion Equity said.

According to the latest edition of the Ion Equity Techpulse, as much as €47.7 million was raised by Irish technology groups in the three months to the end of June. During the period, eight deals were carried out compared with 14 in the second quarter of 2005.

Investment during the second quarter was characterised by particularly strong support from international investors, who accounted for about three-quarters of the funds raised. This compares with about half in the same quarter last year. David Fewer of Ion Equity attributed the increased participation of international investors to the small number of early round fundings that took place during the period. International investors tend to focus more on later funding rounds.

On a half-yearly basis, investment is down 21 per cent from the first half of 2005 at €108.8 million, according to Ion. The total number of deals carried out in the first half of this year was 22, compared with 27 in the year-earlier period. The number of early stage fundings, known as round A, was six, down from 13 a year earlier.

Fewer said he was concerned by the small number of first-round financings being achieved because this meant that in the future there would be fewer companies seeking second and third-round financing.

Of the €47.7 million invested during the second quarter, €12 million went to Cape Clear, a service-orientated technology provider, which raised the funds from Interwest, Accel Partners, ACT and Greylock.

Firecomms, a provider of communications products for the consumer electronics market, raised €9.6 million from three investors, while €9 million went to Corvil Networks, an IP network bandwidth optimisation provider. This was the fourth round of funding for Cape Clear and Corvil, which have now raised a total of €35 million and €40 million, respectively. According to Fewer, the next stage for both of these companies will either be a trade sale or an IPO.Fewer said he expected total investment in 2006 to be slightly down on 2005.