A William Fry-commissioned report has found that funding deals under €10m have taken a big hit in the first three months of 2022.
Venture capital funding into Irish tech businesses was up by more than 50pc in the first quarter of this year, but there’s an unfortunate and potentially troubling caveat to that.
The Irish Venture Capital Association (IVCA) has published today (15 May) its latest report on VC funding into tech start-ups and SMEs in Ireland, which found that the investments increased by 52pc to €379.7m in the first three months of 2022, compared to the same period last year.
But the report, commissioned by Dublin law firm William Fry, also found that VC funding in deals valued less than €10m have taken a hit.
IVCA chair Nicola McClafferty said that the headline figure of a funding boost conceals a “potentially worrying fall” of 30 to 50pc across all categories of deals under €10m – including seed funding.
“All the growth came from eight deals worth over €10m each, including three over €30m. While the momentum carried over from last year has continued for more established companies raising large rounds, some of that impetus seems to have stalled for earlier stage companies.”
Even the total number of deals overall fell by almost a third to 50 from 74 in the same period last year.
McClafferty said that this could be related to international trends affecting the business world right now, such as Russia’s invasion of Ukraine.
“While challenging market conditions may continue, we also know that many great companies are started and built in times of downturn, so we await with interest the data in the coming quarters,” she added.
Deals in the €5m to €10m range fell in value by more than half, while those in the €1m to €5m range also halved from €70.3m last year to €34.5m in Q1 2022. The value of deals below €1m dropped by 31pc to €8.9m.
Seed funding also took a hit, falling by nearly 40pc to €22.3m from €36.5m last year.
Nearly four-fifths of all funding came from overseas sources, according to IVCA director-general Sarah-Jane Larkin.
“While this is to be welcomed and emphasises the quality of Irish tech firms and their appeal to international investors, we have expressed concern before about where any shortfall would be made up if the global economy contracts,” she said.
Wayflyer, Ireland’s latest tech unicorn, led the way in terms of total value of funding received with a $150m in Series B funding valuing the start-up at $1.6bn. Flipdish, another Irish tech start-up that became a unicorn this year, raised $100m reaching a $1.25bn valuation.
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