A 26 million euro fund to invest in start-up companies has been launched by Tanaiste Mary Coughlan.

The finance package will support firms in the early stages of development which focus on export and operate in the technology, food and financial services sectors.

The scheme, called the Bank of Ireland Seed and Early Stage Equity Fund, will also finance patent and patent pending projects within Irish universities.

Ms Coughlan said the fund was part of the Government's bank recapitalisation initiative.

"A healthy seed and venture capital environment is absolutely essential for stimulating the growth of new and innovative businesses that have real potential to grow and expand into export markets," said the minister for enterprise, trade and employment.

"This fund underpins Enterprise Ireland's strategy to stimulate entrepreneurship and increase the flow of new high potential start-ups which are the life blood of a thriving indigenous business sector."

The scheme is the University of Limerick Foundation's (ULF) eighth fund supported by Government through Enterprise Ireland. It includes a 17 million euro investment by Bank of Ireland, 8m euro from Enterprise Ireland, and 1m euro by ULF and will be managed by Kernel Capital.

Bank of Ireland's Richie Boucher said the fund will target investments in the range of 100,000 euro to 500,000 euro.

"In the current economic climate, supporting new high potential start-ups, university spin outs and more developed companies is central to Ireland's economic recovery and growth," said Mr Boucher.

"This fund demonstrates our commitment and support to early stage companies with significant growth prospects."