SummIT 2004 contrasted pleasantly with last year's conference,during which the Nasdaq was languishing at five-year lows, writesJamie Smyth, Technology Reporter
Three years of falling stock markets have taken a toll on Ireland's clutch of private tech firms but confidence is slowly returning to the sector - judging by an upbeat atmosphere at SummIT 2004.
Goodbody Stockbrokers' annual technology conference this week showcased 20 young technology firms - selling everything from hostel beds to Java games - to 60 Irish and international-based venture capitalists.
Firms featuring at the conference outlined their plans to raise funding, and some even felt confident enough to predict exit strategies for their shareholders.
This is a far cry from the more downbeat assessment at last year's SummIT conference, when the Nasdaq was languishing at five-year lows.
"We will establish ourselves as the number one player in the US by 2006 and will complete a trade sale or IPO in 2007 that will make our investors famous," said Mr Jamie Andrews, finance director at Lagan Technologies.
This is a bold statement for a firm currently raising €3 million to finance its expansion. But Lagan, a Belfast firm that develops customer relationship management software for the local government sector, has increased sales during the recent downturn and, like many survivors, sees better times ahead.
"We have grown revenue by a factor of 10 since 2000 and we are now generating annual revenue worth €6.5 million. Since January 2003, we have been trading profitably," said Mr Andrews
Like many of the 20 firms at the conference, Lagan wants to raise cash to speed its development and break into the US and European marketplace. So what are its chances of getting funding?
There is certainly no shortage of funding available to Irish technology companies at the minute, says Mr Joe Tynan, partner with PricewaterhouseCoopers, who estimates that €1 billion has been raised by venture capital funds to target the Irish market.
"There has been the downturn effect in the last few years when little money was being invested, but we are genuinely coming out of that period now," he says.
Statistics compiled by Goodbody Corporate Finance to present to the conference suggest a more positive funding environment is taking hold.
These show Goodbody predicting that venture funds will invest €225 million in 2004, a significant increase on the €160 million invested in 2003 but still short of the €400 million invested during the peak of the boom in 2000. These investment levels suggest the Republic is ranked top of the European league table in terms of the amount of venture funding invested as a percentage of gross domestic product.
Only Sweden and Ireland can boast funding levels above 0.10 per cent of GDP.
Ireland has a strong brand within the technology industry and firms are able to exploit that on an international playing field, according to Mr Greg Garrison, a director of PricewaterhouseCoopers's prestigious Menlo Park Technology team, who flew into Dublin for the conference. He is also upbeat about the investment climate.
"There has been a definite resurgence in the US and this is now happening in Europe ... I was at a UK conference last week and it is quite obvious that there is money available for companies with good ideas, proven business plans and strong management."
This emphasis on strong management teams and proven business cases was a key theme of SummIT 2004. Time and again, presenters from the technology firms and venture community highlighted revenue streams and the "path to profit".
In its presentation, Selatra, a Cork-based mobile gaming company founded in late 2002, said it was on target for €2 million revenues this year. It also revealed a deal with one of the world's biggest mobile firms, China Mobile.
"We are looking at funding of about €1 million to fund a further land grab. There are 400 mobile operators in the world and it is a huge opportunity. We are only limited by the number of sales agents we have," said Mr Martin Creaner, Selatra's vice president.
Judging by the amount of cash available to Irish firms, there is a good chance they will secure funding unless there is a renewed slump in confidence among technology investors. But the recovering stock markets are at last beginning to offer investors exits from their existing positions in tech firms.
Several technology IPOs have already taken place in the US this year, and high-profile offerings from Google and Salesforce.com could reignite within months.
Investors are also being offered exits from the increasing number of mergers and acquisitions within the sector. Network 365, Eware and Amacis have all been involved in big deals recently and more are being negotiated.
Mr Mark Ward, partner with A&L Goodbody, said up to 50 Irish firms had been in contact with the legal experts to discuss potential deals. Several Irish firms are also in discussion with Goodbody Stockbrokers about taking listings on the alternative investment market in Britain.
Perhaps the only foreseeable problem for small Irish tech firms is the delay in expanding the business expansion and seed capital schemes. These tax relief schemes have proven very useful for entrepreneurs to raise the initial funding to translate their ideas into companies.
Upstart Games, a mobile gaming company set up by Mr Barry O'Neill and Mr John Dennehy, is one of scores of Irish technology firms that have used the schemes to raise funding.
The delay has been caused by the failure of the European Commission to sanction the Government's plan to extend the schemes until 2006. Before this occurs, the Minister for Finance, Mr McCreevy, cannot sign an order to allow the schemes to come into effect, says Mr Brendan Butler, director of ICT Ireland. He is concerned that some small firms could run into funding problems if the schemes are not set up soon.
Overall though, 2004 is likely to see the funding climate improve for most companies.
