Despite major deals and a recovery in seed funding, venture capitalists reveal sub-€10m funding gap for Irish SMEs.
Venture capital investment raised by Irish SMEs in the second quarter of 2024 was up 7% on last year to €494m. This is the second highest level on record.
However, overall funding for the half year fell by almost a quarter (22%) to €752.7m.
“Companies are doing well raising early-stage seed funding but are struggling to kick on in the next vital growth phase”
With the exception of seed funding, the latest IVCA VenturePulse survey, published in association with William Fry, revealed how there is a major gap in deals under €10m.
“Deals in the €5-10m range fell by 44% to €27m in the second quarter, compared to the same time last year,” said IVCA chair Gerry Maguire.
“This worrying trend continued right across all deal sizes from €1m to €5m. It suggests that companies are doing well raising early-stage seed funding but are struggling to kick on in the next vital growth phase.”
Maguire said that while the number and value of deals in the €10m plus range had performed well in the second quarter, over 90% of this funding came from international investors.
“This is a testament to the quality and ambition of Irish companies, but points to the importance of having Irish funds of scale that can co-invest or lead these rounds. This really highlights the need to increase the availability of growth finance from local sources.”
The top five deals in quarter two worth more than €30m were regulatory compliance company, Corlytics (undisclosed amount); life sciences firm, SynOx Therapeutics (€70.3m); fintech company, AccountsIQ (€60m); cybersecurity specialist, Tines (€50m) and marine technology firm, XOCEAN (€30m).
Recovery in seed funding
Sarah-Jane Larkin, director general of the IVCA, said that thanks to long standing Government policies supporting early stage funding, the recovery in seed funding had continued from the first quarter of this year.
Seed funding, or first rounds raised by SMEs, in quarter two rose by 18% to €53.2m, compared to the same period last year. Seed funding for the half year rose by 79% to €93.6m.
“While seed funding remains robust, the IVCA is looking forward to the report of the implementation committee set up by Peter Burke TD, Minister for Enterprise, Trade & Employment, on measures to assist these exciting, high potential start-ups take their next steps through greater access to scaling finance.”
The life sciences sector with €297m (39%) led the way in funding for the half year followed by envirotech (13%); regtech (12%); fintech and software (both 9%).
Main image at top: Sarah-Jane Larkin, director-general of the IVCA with chair Gerry Maguire
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