Irish SMEs see jump in VC funding despite global uncertainty

28 Nov 2022

IVCA chair Leo Hamill. Image: Chris Bellew/Fennell Photography

A new IVCA report has found that Ireland compares ‘favourably’ to Europe when it comes to attracting tech venture capital.

Venture capital funding into Irish SMEs jumped up by 34pc in the third quarter of the year.

That’s according to the Irish Venture Capital Association (IVCA), which said the figure stands at €309m compared to €230.6m in the same period last year.

The latest IVCA VenturePulse survey found that funding into Irish SMEs – mostly tech companies – has crossed the €1bn mark for the first nine months of the year. This is up by 25pc over the same period last year.

IVCA chair Leo Hamill said that these results are “encouraging” for Ireland’s indigenous tech sector and compare “favourably” to Europe in light of continuing global economic uncertainty.

Funding in Europe in the third quarter fell by 35pc year on year and by 44pc for the first nine months.

“However, when you drill down into the data, it shows that the growth in the third quarter in Ireland was driven by two deals in the €30m-plus category – Fonoa and Tines – and five deals in the €10m to €30m range,” Hamill said.

Meanwhile, deals below the value of €10m dropped. IVCA director general Sarah-Jane Larkin noted that deals between €5m and €10m fell 54pc from €72.2m to €33.5m during the third quarter, while deals under €1m fell by 41pc from €11.4m to €6.7m.

“More tellingly perhaps, the number of deals in the latter category dropped sharply to six from 22 in the same quarter last year,” she said.

“The softness in these two categories probably reflects uncertainty over the global economic outlook combined with the impact of the Russian war against Ukraine.”

Seed funding in Ireland, however, was up by an impressive 45pc. This compared favourably to Europe, where seed funding fell by 29pc quarter over quarter and 20pc for the year to date compared to 2021.

Larkin said that this strong performance compared to the rest of Europe was probably due to the number of Irish funds currently investing at seed stage in the Irish market including Act Venture Capital, Delta, Elkstone, Furthr and Lightstone Ventures, among others.

“This will be further backed up by the Government’s €90m Irish innovation seed fund which is supported by the European Investment Fund.”

In terms of sectors attracting the highest funding, cybersecurity and fintech led the way – each raising 28pc of the total funding. They were followed by software (13pc) and life sciences (10pc).

In September, the IVCA said that Irish tech companies had raised record levels of venture capital in the first half of 2022 – but cautioned that a slowdown in the second quarter could threaten the outlook for the rest of the year.

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Vish Gain is a journalist with Silicon Republic