VC investment dries up in Q3

Venture capital investment in the UK and Ireland tech space suffers a setback after four promising quarters

VC of despair: Venture capital investment in the UK and Irish tech space slumped 40 per cent annually in q3

The amount of venture capital (VC) cash flooding the UK and Ireland tech sector plummeted 40 per cent annually in 2010’s third quarter.

Figures from Ascendant Corporate Finance reveal £134m worth of VC money was invested in UK and Irish tech firms in Q3. This represents a sequential drop of almost 30 per cent and a decline of 40 per cent on Q3 2009. The value decline is despite a rise in deal volumes.

From Q1 2006 to Q4 2008, quarterly investment in the UK and Ireland tech sector never dipped below the £150m mark. It frequently reached £200m-plus levels and twice soared well above £300m.

After a shaky end to 2008, investment levels remained low for the first half of last year. The amount of VC cash entering the tech space in Q109 was less than a third of the figure posted in the preceding year.

But the market picked up dramatically in Q3 last year and the investment slump in this year's third quarter comes after four solid, £150m-plus quarters. Almost 40 per cent of Q310 investment – some £51m – was ploughed into the internet and wireless space. Software investment totalled £20m.