Technology investment in the UK and Ireland started strongly in 2008 with an increase in both the value and volume of deals, according to Ascendant Technology, the technology-focused investment group.

"Although the number of active number of active investors declined, VCs and private investors increased the capital they invested in Q1 by 15 per cent to £357m, backing 13 per cent more companies which rose to 72 businesses", according to Stuart McKnight, CEO of Ascendant.

In Q108, £357m was invested in 72 deals of over £0.5m by 102 investors, according to Ascendant. The ten biggest deals, taking over half the total funds invested, were:

• Spinvox (£50m)
• Money Expert (£25m)
• Realtime Worlds (£25m)
• Complinet (19m)
• Badoo (£17m)
• Seatwave (£13m)
• Velocix (Cachelogic) (£13m)
• ORECon (£12m)
• Quartix (£12m)
• Gas2 (£10m)

Private investors continue to play an increasing role in the sector - participating in 19 per cent of completed deals. This compares to 13 per cent of all deals in 2007.

Notwithstanding the effect of the Spinvox deal, Internet/Wireless services companies (£160m) still took the biggest share of investors' funds, followed by Software (£79m), Cleantech (£38m) and Other Technologies (£30m).

Internet/Wireless services and Cleantech experienced a strong increase in investment, Communication Services displayed modest improvement, but all other sectors declined, said Ascendant.

22 Internet/Wireless service companies were backed by VCs in Q1 - an increase from Q1 2007's total of 17. However the increase in the volume of deals is dwarfed by the close to 4x growth in funds invested in the sector. The largest deals were Spinvox, Moneyexpert, Badoo, Seatwave, OpenX, Touch Local and Livebookings. Significant deals with undisclosed values included Mydeco and Reevoo. Social networking and casual gaming propositions attracted lots of interest.

The busiest investors were Balderton Capital, Scottish Enterprise Fund, Atlas Ventures, Bank of Scotland Growth Equity, Eden Ventures, Fidelity Ventures, NorthStar Equity Investors and SPARK Ventures

Semi/Opto companies experienced their lowest level of Q1 VC investment for many years. Three companies shared just £10m compared to £76m in Q1 2007.

Although the number of completed Cleantech deals did not increase significantly, investors doubled the funds they committed to the sector compared the same period last year.

Whilst investment in software businesses was largely static, the sector remains the second largest as measured by funds invested, said Ascendant, One bright spot for the sector was that the number of businesses that received investment increased to 20 - a notable improvement on the low of 14 in Q1 2007.

Regionally, London was the most favoured by VCs, receiving close to half of all funds invested. VCs invested in 28 companies in this region amounting to £175m in Q1 including the £50m that went to Spinvox.

The next biggest region in terms of investment was the North (i.e. from the Scottish border to approximately South Yorkshire) which took over £43m, according to Ascendant, it was followed by Scotland (£42m), Cambridge (£22m), the Thames Valley and Ireland who both received approximately £17m. Unusually there were no material changes in the numbers of companies funded in all regions.

See also: the Electronics Weekly blog UK Tech Startups, covering news on funding for electronics startups

See also: Mannerisms, the blog of David Manners. Updated twice daily, it's the distinctive, entertaining, authoritative and never dull commentary on the semiconductor industry, from someone who knows. Sign up for the Mannerisms eNewsletter.