Venture capital funding into Irish SMEs falls by almost 40% to €190m in third quarter.
Venture capital funding into Irish SMEs fell by 38% in the third quarter of 2023 to €190m from €309m the previous year.
Previous quarters had been buoyed up by significant investments in a few later stage Irish tech firms that were most led by international venture firms so the severe fall-off was to be expected.
“The reliance on international VC investors at a time when US venture capital and private equity investment has slowed significantly, emphasises the need for Ireland Inc to build local private funding sources in order to combat global dependence and headwinds”
According to the Irish Venture Capital Association in its Venture Pulse survey, published in association with William Fry, the third quarter data has raised alarm bells.
Value of deals plummets
“Following a strong first half, overall funding for the nine months to end September 2023 just about held up, with an increase of 6% to just over €1 billion, compared to the same period last year,” commented Denise Sidhu, chairperson, Irish Venture Capital Association.
“However, the Irish third quarter data raises alarm bells, as the value of deals across all sizes fell significantly, with the exception of those under €1m.”
She added that the number of transactions fell by over a quarter (26%) compared to the same period last year.
As an example, she pointed to the value of deals in the third quarter in the €3-€5m range which fell by over a third (34%) to €193.8m compared to almost €300m in the same time last year. The value of deals in the €5-€10m range dropped by over three quarters (76%).
International funding slows
Sarah-Jane Larkin, director general, IVCA, said that another worrying indicator was that the value of international VC investment in the third quarter fell by over two thirds (69%) or by over €120m.
“The reliance on international VC investors at a time when US venture capital and private equity investment has slowed significantly, emphasises the need for Ireland Inc to build local private funding sources in order to combat global dependence and headwinds.”
Largest deals in the third quarter were Ocuco (Software) €60m; Shorla Oncology (Life Sciences) €32m; UrbanVolt (Environment) €26m and ProVerum (Life Sciences) €15m.
Sectors most successful in raising funding in the nine months to end September 2023 included Envirotech or clean energy which raised €580m or 50% of total VC investment, followed by Life Sciences at €157m (14%); Software €92m (7.9%); AI & machine learning €88m (7.6%); and Fintech €82m (7%).
Main image at top: Irish Venture Capital Association director-general Sarah-Lane Larkin and Denise Sidhu, chairperson, Irish Venture Capital Association
