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IVCA Annual Dinner 2004
Industry Update
IVCA welcomes new members
EVCA Meeting
Ireland Update
The Second Guide to Venture Capital launched in October
Presentation to Members by Paul Appleby, Director of Corporate Law Enforcement
Increase in Number of Partners Permitted in a Limited Partnership
IVCA/Enterprise Ireland Seminars
IVCA Council

IVCA Annual Dinner 2004

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The IVCA Annual Dinner held on 14th October at Jurys Hotel, Ballsbridge, Dublin 4 was a great success with the highest ever number (over 450) attending the dinner.
Mr Eoin O’Driscoll, Chairman Forfas was the keynote speaker. Eoin gave a very comprehensive overview on the opportunities and challenges for venture capital as part of the creation of the Knowledge economy in Ireland. Mr Eugene McCague, Arthur Cox Solicitors was the after dinner speaker and gave his own amusing and witty take on the Irish VC industry and its personalities.

From Left
Eugene McCague, Arthur Cox Solicitors,
Shay Garvey, Chairman IVCA,
Eoin O’Driscoll, Chairman Forfas.

Brendan Vaughan, BOI Venture Capital,
Howard Beggs, Midicom
& Martin Nolan, Hibernian.

 

Matt O’Driscoll, Quality Health Care,
Fiona Thornton, LK Sheilds & Philip
Daly, LK Shields.

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Industry Update

Following a difficult number of years there was general welcome at the recent EVCA Barcelona Conference for the recent exits achieved by a number of VC backed companies in 2004 in various parts of Europe. Nearly all exits were by way of trade sales to American corporates. This trend is expected to continue. The other trend in the industry is the increased amount of cross border investment by European VC’s. This was seen as a normal evolution as the Euro VC industry matures. There was a general consensus that the Euro VC industry will consist of regional VC funds and larger pan European or European-US funds.

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IVCA welcomes new members

IVCA welcomes 5 new full members
and 2 new Associate Members.

• Anglo Irish Capital Partners Limited
• Deal Management
• EVP
• Kernel Capital Partners
• Seroba Bioventures
• Grant Thornton Corporate Finance
• PWC Belfast

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EVCA Meeting

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The European Venture Capital Association (EVCA) and the national associations of the larger countries
are assisting the ten accession states as they take the first steps in creating a venture capital industry. It is interesting to see that Ireland and Finland are seen as models for the new accession states as regards
creating a vibrant high technology based VC industry.

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Ireland Update

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Recent statistics issues by Venture One report that 32 Irish companies have received VC investment to date in 2004, totalling Û90 million euro. This is similar to 2003 investment levels. It is 1/8th the investment
activity level reported in the UK, an economy which is 15 times the size of Ireland’s.

The IVCA Annual Golf Outing 2005 will take place on Thursday the 12th May 2005 at The Powerscourt Golf Club, Enniskerry, Co.Wicklow. For more details contact Ciara Burrowes at 01 276 46 47 or administrator@ivca.ie

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The Second Guide to Venture Capital launched in October

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After the Success of the first Guide to Venture Capital published last year in Association with Equity Network, the second Guide to Venture Capital was launched at the IVCA Annual Dinner in October.

From Left
Barry Fitzsimons, Chairman Equity Network and
Vice Chairman Intertrade Ireland, Shay Garvey,
Chairman IVCA Fergal McCann, Equity Advisor,
EquityNetwork

 

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Presentation to Members by Paul Appleby,
Director of Corporate Law Enforcement

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As part of the “best practices” initiative, the IVCA hosted an evening seminar in May for members on the topic The New Company Law Regime – Improving Corporate Standards. Paul Appleby the Director of Corporate Law Enforcement (DCE) presented the seminar. Over 70 Members attended.

Mr Appleby outlined the provisions of the Companies Act 2003 that are due to come into force in relation to directors’ compliance statements in statutory accounts, the requirement to have audit committees in certain instances, and audit exemptions. He also referred to the work of the Company Law Review Group
(CLRG), which advises the government on reform and consolidation of the Companies Acts with the stated aim of making company law a factor of competitive advantage. The CLRG is working on a single consolidated Companies Act that will also modernise existing areas of company law and is at draft Bill stage.

Michael Murphy on behalf of the IVCA stated that the IVCA encourages and is supportive of good corporate governance in line with best practice. IVCA members typically appoint nominee directors to the
boards of investee companies. These directors generally serve on the audit and remuneration committees of the boards. Notwithstanding the excellent pool of experienced people available, potential
nominees will be increasingly reluctant to accept nominations to early stage highrisk companies. This could ultimately impact the level of funding available to VCs and young SMEs. There is a need to ensure that there is a balanced approach to regulation so that start-up companies can be nurtured through the most difficult stage of their development.

The IVCA continues to address this important issue and will hold another seminar for its members in early 2005. The objective of the seminar will be to give complete guidance to its members and other Non executives on their roles and duties as company directors.
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Increase in Number of Partners Permitted in a Limited Partnership

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In August, 2004, an Tánaiste, Mary Harney, as Minister for Enterprise, Trade & Employment, signed an Order that increases from 20 to 50 the number of partners permitted in a Limited Partnership registered under the Limited Partnership Act 1907, where such partnership “is formed for the purpose of,
and whose main business consists of, the provision of investment and loan finance and ancillary facilities and services to persons engaged in industrial or commercial activities”. This increase is an
important change and, in this respect, now brings venture capital limited partnerships in Ireland in line with those in the UK.

The concept behind venture capital limited partnerships is that the partners (or investors) in the partnership are liable only for the amount of the capital they have committed to the Fund. Until this
Order was made, partnerships comprising more than 20 partners were not limited partnerships governed by the Limited Partnership Act 1907, and, therefore, as in a normal partnership, each partner was
unlimitedly liable for the undertakings of the partnership.

In practical terms, a limit of 20 partners may have been adequate for most venture capital limited partnerships but complications can arise as the number of partners approaches 20. For example, all
the trustees of a pension fund that invests in a venture capital fund (Fund) are considered partners in the Fund. The number of such trustees is usually seven and is, of course, outside the control of the Fund or its management company. It was, therefore, quite easy for a limited partnership to become no longer limited if the number of partners slipped over the 20 partner limited.

The mechanism to avoid this possibility has been to establish parallel partnerships, none of which would have more than 20 partners, investing side-byside in the underlying investee company. However, some lawyers were unhappy with this approach on the basis that it was merely a device and not legally sound. As a result, a Fund with such a structure could be held not to be a limited partnership with the negative
consequences and exposures referred to above. Indeed, Enterprise Ireland, as a State body, were unwilling to become a partner in a Fund that had more (or was likely to have more) than 20 partners,
even where the parallel partnership structure was used.

After many meetings with An Tánaiste, and her officials, and much correspondence extending over several years, it is gratifying that the Order (S.1.No 506 of 2004 Companies (Amendment) Act 1982 (Section 13 (2) Order 2004) has now been made. There will be a new look to the IVCA Website from December 2004. There will be a lot more useful information available to download. It will also be a very valuable reference point.

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IVCA/Enterprise Ireland Seminars

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The IVCA has had a series of meetings with Enterprise Ireland, which has resulted in a number of initiatives to improve communication and coordination between the two organisations. A very
successful networking event was held on 30th September and a further event took place on 25th November 2004. Enterprise Ireland is the largest VC investor in Ireland if one aggregates its investments as a limited partner (LP) in the various VC funds under the Programme for National development and its direct investment in technology companies.

EI and the IVCA have identical goals, namely the creation of a strong and vibrant indigenous technology industry in Ireland.

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IVCA Council

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Michael Murphy (Chairman)
Niall Carroll
Des Fahey
Shay Garvey
David Gavagan
Tom Kirwan
John McInerney
Conor O’Connor
Karl Schütte

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