Irish SMEs suffer 57% drop in venture capital funding in first quarter

Software companies account for only 9% of total funding secured

Trade

Sarah-Jane Larkin and Denise Sidhu, Irish Venture Capital Association

Venture capital funding into Irish SMEs fell by nearly a half (48%) to €258.5 million in the first quarter of 2024, compared to €502 million in the same period last year, according to the Irish Venture Capital Association VenturePulse survey published in association with William Fry.

“Despite this fall, investment in the last three quarters has held up well against a backdrop of global uncertainty,” commented Denise Sidhu, chairperson, Irish Venture Capital Association. “This quarter and the same period last year each included one exceptional deal above €100 million. If one excludes these two outliers then the decrease in Irish funding is in line with global trends which saw a 20% decline in the first quarter.”

Seed funding (representing first rounds raised by SMEs) showed resilience with very early-stage Irish companies raising €40 million.

While there was a downturn in funding across the majority of deal sizes, companies looking to raise €1 million-€3 million enjoyed a positive first quarter. Funding in this sector rose by 126% to €22.7 million compared to €10 million last year.

Sarah-Jane Larkin, director general, IVCA noted that international funding into Irish SMEs in the first quarter fell by 57% to €184 million from €425 million last year.

“The Irish ecosystem for getting companies off the ground, including Government and state bodies such as Enterprise Ireland and the Irish Strategic Investment Fund, is largely working well. The big challenge is our over dependence on unpredictable international investors in taking these start-ups to the next level of growth.”

She added that the IVCA’s pre-budget submission would also make a case for allowing pension savers the opportunity to invest in Ireland’s dynamic indigenous start-up tech sector under the planned auto enrolment scheme, as happens in France.

The top five deals in the first quarter were: medical device company, Mainstay Medical (€115 million); energy transition firm, GridBeyond (€42 million); fintech software company, Halo Technologies (€18.4 million); space tech supplier, Mybronics (€15 million) and medtech company, Cumulus Neuroscience (€13 million).

The life sciences sector (62%) led the way in funding this quarter followed by envirotech (17%) and software (9%).

TechCentral Reporters

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