Angel investors get ready to take a punt on the big trends in tech.
Angel investment in Ireland is forecast to rise by 17pc in 2018, with angel investors increasingly focused on big trends in medtech, artificial intelligence (AI), augmented reality (AR), virtual reality (VR) and the internet of things (IoT).
According to the Halo Business Angel Network (HBAN), which represents angel investors across the island of Ireland, investment levels from angel investors are on track to reach €25m a year by 2020.
‘AI has growing phenomenally for the last number of years, is estimated to reach revenues of $60bn by 2025’
– JOHN PHELAN
To date, HBAN angels have invested €80m in Irish start-ups and these investments have leveraged a further €124m from other public and private funds, bringing the total invested to €204m.
In total, HBAN angels have completed 395 investments.
HBAN, a joint initiative of Enterprise Ireland and InterTradeIreland, said it intends to meet these big trends in AI, AR, VR, IoT and medtech head-on by increasing the number of angel investors involved in syndicates.
This will be driven in particular by an increase in international angel syndicates taking an interest in Irish start-ups and the trend towards co-syndication, whereby different syndicates invest simultaneously in the one start-up.
“Although the start-up scene in Ireland is fertile, it needs to be continually nurtured,” said John Phelan, national director of HBAN.
“Both the Employment Incentive and Investment Scheme (EIIS), which enables individual investors to obtain income tax relief on investments made, and the Key Employee Engagement Programme (KEEP), which provides advantageous tax treatment on employee share options, are helpful to the start-up sector.
“Notwithstanding that many investors are returning to the property investment market, HBAN would like to see more schemes and policies that incentivise investing in and creating the next generation of Irish start-ups.”
Angels to flock around new opportunities
With AI, AR, VR, IoT and medtech dominating angels’ agendas, Phelan said that as these technologies become more understood, investments will naturally follow.
Last year, the medtech sector in particular proved to be attractive to HBAN angels, with €4.1m invested in just seven major deals. One of the big stories was Cork-based AventaMed, which received €1.8m in a deal with three HBAN syndicates: MedTech, Boole and Irrus.
HBAN predicts that Ireland’s medtech hub will continue to present excellent opportunities for angel investors in 2018, and that the average deal value in this space will increase from this year’s €585,000.
Other sectors that HBAN forecasts to be big in 2018 include AI and IoT.
“AI has growing phenomenally for the last number of years, is estimated to reach revenues of $60bn by 2025 and has reached a critical point. People now understand how to use the technology and the value it has for business. A simple example of this is how banks engage with their customers through customer service call centres. When a customer calls a customer service desk with a query, AI can potentially answer the query or funnel the query to the right department through an AI-enabled chatbot; the result is offering a better-quality service to customers through machine learning. As the technology progresses and develops, we expect to see AI being used in bigger enterprise projects.
“IoT is growing exponentially with lots of different platforms for both products and infrastructure. We are starting to see emerging business models for applications, and it’s another exciting and fast-moving space.”
Phelan continued: “We are also seeing companies beginning to understand the business application of AR and VR. Previously in VR, it was mainly the ‘techies’ who understood the technology and created the visuals. However, as more creatives engage with the technology, the images will become more beautiful and realistic. This will broaden the appeal for the consumer market, and I think we’re set to see some interesting start-ups in this space as the business models develop.”