Despite plummeting valuations and a harder funding environment most Irish tech companies plan to hire in 2024.
The mood of Irish tech companies can best be described as “mixed” 64% of respondents to TechIreland’s third annual Innovation Island Pulse report believe Ireland is a better place to start a business than five years ago.
That said, more recent conditions where valuations are down and fundraising is more difficult than a year ago, the view is that it is getting tougher.
“Founders have become realistic about valuations recently and that has brought about more of a focus on sustainable growth and profitability rather than top-line growth”
Only 40% believe Ireland is a better place to start a tech business than a year ago. Conversely, 36% of the more than 100 tech business owners surveyed believe it is a better place to start than a year ago.
Despite the challenges, most companies say they will be hiring in 2024.
The genAI is out of the bottle
“‘New Customer Acquisition’ and ‘Product Development’ are the key priorities, so it is no surprise that sales and business development top the list of potential job openings, followed by digital marketing, artificial intelligence (AI) and data science,” said TechIreland.org’s John O’Dea.
“AI is clearly a sector that’s hotting up with ChatGPT and Dall-E as the favourite generative AI platforms for text and images. Half of all respondents are also using generative AI for tuning foundation models, code compilation, code review and low code applications.”
On the fundraising front 57% believe it is more challenging now than a year ago to raise funding.
56% of companies believe there are good fundraising opportunities in Ireland. Of those that don’t believe so, more than half have raised funding from international investors.
“Founders have become realistic about valuations recently and that has brought about more of a focus on sustainable growth and profitability rather than top-line growth,” said Bank of Ireland’s head of Technology, Media and Telecoms Paul Swift.
“While there are challenges in the broader economy, it’s great to see founders being optimistic about the year ahead with many companies planning to increase headcount during 2024.”
Scale Ireland chair Brian Caulfield added: “The partial exit of Cubic Telecom demonstrates what can be achieved with a strong business model and impressive growth, even in a difficult market.”
Looking to the year ahead the challenges identified as most significant were funding and lower valuations, global recession and inflation, the availability of tech talent and disruptive tech such as generative AI (GenAI).
“Productivity and AI tools are now front and centre for many startups. They will be key to future success of the Irish ecosystem,” said Google’s Paddy Flynn.
“Irish companies are incredibly resilient and adaptive, and it is encouraging to see positive sentiment around hiring and revenue projections this year,” added Aislinn Mahon from Huckletree.
“At Huckletree we see first-hand the importance of community and network in challenging times. Asking for support and feedback is important – no mind is an island!
In terms of top platforms used by Irish companies, Slack is still the favourite collaboration tool, Zoom seems to be losing out to Teams and Google Meet for meetings, AWS leads the Cloud space, Stripe is on top for payments and Hubspot for CRM, while Google products are strongly distributed across applications.
This year sees the highest rates of diversity among respondents, with 40% of companies having at least one female founder or co-founder and over 20% reported having at least one of the leadership team who would identify as an immigrant or “new Irish” (TechIreland’s database is now tracking team diversity).
Enterprise Ireland and other state supports, both financial and non-financial, are still seen as the most important. There is a noticeable increased interest in cross-border business opportunities and Northern Ireland as a potential business location.
“Despite the challenges from 2023, which will persist into this year, I have cautious optimism for the startup ecosystem in 2024,” said Ian Browne from NDRC. “Late stage funding will continue to be difficult and there will be more companies who fail after raising at the top of the market in 2021. My optimism is at the early stage where I can see some green shoots of recovery.
“The interest in AI is percolating across sectors and in the past 3 months we have seen an uptick in the number of pre-seed and seed investments in our portfolio. There are also an increasing number of high quality founders emerging and at NDRC we are focused on providing these entrepreneurs with the support they need to break through in 2024. So my hope is that we have hit or are close to the bottom – this means it is a very good time to start a new technology company.”
