Record unicorn-style funding deals distort reality of a tough environment for SMEs trying to raise anything below €5m, IVCA 2024 figures confirm.
In what was a new record year for the Irish venture capital sector tech SMEs raised €1.48bn in 2024, up 9% on the previous year.
In the recent fourth quarter, venture capital deals reached €535m, up 162% on the previous year, according to the latest Irish Venture Capital Association VenturePulse report published in association with William Fry.
“Deals right across all sizes below €5m fell during 2024 and in quarter four”
A series of big investments proved that Ireland has the right stuff in terms of well-run businesses focused on relevant technologies for landing key investments. But all is not well in the land of Irish tech.
A bullish view on AI
Gerry Maguire, chair of the Irish Venture Capital Association, which is marking its 40th anniversary this year, painted a mixed picture.
“Growth in the year and final quarter was driven by big investments which demonstrates that Ireland has the capacity to create and scale world class tech firms.”
However, he described the funding environment for firms looking to raise less than €5m as “choppy.”
He said: “Deals right across all sizes below €5m fell during 2024 and in quarter four.”
Artificial Intelligence (AI) accounted for over €100m of the total VC investment into Irish firms last year.
Maguire said that the recent impact of Chinese operator DeepSeek is likely to increase, not decrease, appetite by VC investors in the sector.
“The arrival of players such as DeepSeek has the potential to boost margins and decrease development costs for AI start-ups. We are potentially witnessing the democratisation and ease of participation by AI developers, in the same way that software-as-a-service (SaaS) or cloud computing transformed and disrupted the traditional software model.”
He pointed out that the DeepSeek driven sell off of Nasdaq stocks mostly affected big chip makers, or AI platforms of Google, Microsoft and others, not areas in which most Irish AI firms compete.
“There is massive potential in AI applications across healthcare, climate, education and other sectors, and this will be boosted by lower costs of development which represents a major opportunity for Ireland.”
Call for more Government action
Despite the bullish view on AI, an area that Ireland has a plethora of emerging players of scale, the bleak reality is many of these companies will struggle to raise funding at a critical early stage in their development.
Sarah-Jane Larkin, director general, IVCA said that fourth quarter and annual data emphasised the potential for the new Government to support investment in early-stage companies.
“AI company, Nuritas, for example, raised €42m in quarter four but its first round back in 2015 was just over €100,000. Co Louth based company, XOCEAN raised €115m in this quarter and is now a world leader in sea drone technology.”
She said that current global economic and political turbulence, largely driven by the new administration in the US, means that the Government’s latest €250m Seed & Venture Capital Scheme 2025-20291 “couldn’t come at a better time”, with applications for the first call of up to €100m to be submitted to Enterprise Ireland by the end of this week (February 20).
“This is very welcome as funding for deals below €5m fell sharply across the quarter and the year.”
Deals in the €3m to €5m range fell by 37% to €82m for the year, and by 56% to €17.6m for the fourth quarter 2024, compared to the same period the previous year.
Funding in the €1m to €3m category fell by 24% to €105m for the year and by 63% to €23.6m for the quarter. Investments below €1m declined by 4% to €28.9m for the year and by 19% to €7m for the quarter.
Seed funding, or first rounds raised by SMEs, decreased by 4% annually to €127m and by 55% to €17.9m in the quarter.
The top five deals in quarter four 2024 were: Dublin headquartered medical device company, Fire1 (€116m); Louth based sea drone developer, XOCEAN (€115m); Dublin headquartered travel software firm, Nuitée (€46m); Dublin headquartered AI company, Nuritas (€42m) and Dublin based fintech firm, NomuPay (€35.9m).
Life sciences accounted for 37% (€552.9m) of the total raised in 2024, followed by Software: 13% (€185m); Envirotech: 11% (€161.7m); Fintech: 8% (€119m) and Data: 8% (€115m).
217 deals were completed in 2024, similar to the previous year (216).
“In view of global headwinds, we should be ambitious and aiming to double this,” Larkin urged.
Main image at top: IVCA chair Gerry Maguire and IVCA director-general Sarah-Jane Larkin
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