The UK high-tech venture capital market has had a good year, according to Ascendant the technology-focussed investment group with, so far, £765m invested in 197 deals by 212 investors.

"The first half of 2008 went very well for UK/Irish technology companies raising venture capital", Stuart McKnight, CEO of Ascendant, told Electronics Weekly, "in the 3rd quarter value of funds invested dropped by 5 per cent to £208m whilst the volume of deals remained static at 68 deals. Against a backdrop of rapidly declining economic indicators, the banking crisis and general uncertainty this is much better than we expected."

The top ten deals for Q3, representing 61 per cent of the total investment for the quarter were:

• Plastic Logic (£25m)
• Miniweb Interactive (£18m)
• G24i (£15m)
• Fleetmatics (£13m)
• PCH International (£12m)
• Nujira (£10m)
• Enqii (£10m)
• Intelligent Energy (£9m)
• Secerno (£8m)
• Mydeco (£7m)

The busiest investors were Amadeus Capital Partners, Scottish Enterprise, Eden Ventures, Enterprise Ireland, Herald Ventures, Kreos Capital, NorthStar Equity Investors and YFM Group.

However, McKnight warns: "There has been a shift of focus away from 1st and 2nd stage deals. This indicates to us that the market is beginning soften. We are actively involved in a number of fund raising deals and know that many investors are not anticipating closing any further deals in 2008 and are very particular about what they will consider in Q1. Whilst we do not think UK/Irish tech VC will retreat to 2003 levels of activity, it is clear that many investors are adopting a cautious approach at this time and we expect Q4 to be very quiet and 2008 to finish down in terms of value and volume."

In Q308, £208m was invested in 68 deals of over £0.5m by 100 investors. Ireland did particularly well in Q3 with the number of high-tech VC investments up 150 per cent and the value up by 172 per cent.

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In Q3, Internet/Wireless services companies took the biggest share of investors' funds. Only the Software and Semi/Opto sectors received more funds in Q3 2008 compared to Q3 last year. The latter was primarily due to the Plastic Logic deal otherwise Semi/Opto companies would have joined the "down" group. All other sectors were down in terms of volume and value.

18 Internet/Wireless Service businesses received £53m. The key deals included Miniweb, Enqii and Mydeco. 16 Software companies attracted £36m. The major investments involved Secerno, Enigmatic, CommProve and VisionOSS.

11 Cleantech enterprises took £37m. The biggest transactions included G24i, Intelligent Energy, Evap and Vairex.

8 Semiconductor companies received £39m. The deal list was dominated by Plastic Logic but AWS, Nanotech Semi and Critcial Blue also raised significant funds.

Comparing the year to date with same period in 2007, investors are completing significantly less 1st and 2nd Round deals (64 per cent of deals in 2008 vs 72 per cent of deals in 2007) and are favouring later stage companies.

There were significant differences in the performance of the Regions in attracting VC funds. Most notably London experienced a drop in both volume (-19 per cent) and value (-35 per cent) of deals for the first time in 5 years.

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