Irish tech raised record VC funding of €778m in first half of 2022

11 Sep 2022

Sarah-Jane Larkin, director-general of the ICVA. Image: Diane Cusack

The latest IVCA report found that there was a 50pc fall in overseas funding for Irish tech companies in the second quarter of the year.

Irish tech companies raised record levels of venture capital funding in the first half of this year, but a slowdown in the second quarter could threaten the outlook for the rest of 2022.

That’s according to a report published today (11 September) by the Irish Venture Capital Association (IVCA). It found that VC investment in Irish tech companies rose by 21pc to a record €778.1m in the first half of the year.

The IVCA noted that this performance was largely due to a strong first quarter, when funding reached €379.7m. The second quarter, however, saw a slowdown with only a 2pc rise to €398.4m compared to last year’s record second quarter.

“It was a strong first half overall for Irish tech companies raising funds, especially when one considers the geopolitical and economic headwinds and downturn in publicly quoted technology stocks over this time,” said IVCA chair Leo Hamill.

“It remains to be seen whether the significant slowdown in growth in the second quarter to under 2pc heralds a more difficult second half to the year.”

Hamill, who took over as chair of the IVCA in July, said that there was a 50pc fall in overseas funding into Irish tech companies in the second quarter – from €303m to €152m.

“This over-reliance on foreign investment threatens Ireland’s ability to continue to develop indigenous world-class technology companies,” he said.

“The tide of available global capital is starting to go out, which highlights the importance of our pre-Budget submission recommending measures to boost domestic sources of funding.”

Larger deals needed in second half

It wasn’t just funding from abroad that took a hit. Seed funding for Irish start-ups fell by 7pc to €47.1m in the first half – down from €50.5m in the same period last year.

IVCA director general Sarah-Jane Larkin said that while there was a recovery in seed funding in the second quarter, rising by 77pc to €24.8m, it was an improvement over a low base.

But Larkin expects this upturn in seed funding to continue because of the Government’s €90m investment fund aimed at Irish start-ups launched earlier this year.

Deals in almost every transaction category fell in the second quarter, according to the report published in association with William Fry.

The exception was deals valued in the €10m to €30m range, which grew by 50pc to €257.5m, and those valued over €30m, which increased by 36pc to €371.7m. Deals in these categories included funding for Trinity Biotech, TransferMate and &Open.

“Based on deal sizes, it’s quite hard to analyse what’s going on in the market until we see the results from the next two quarters. If the larger deals fail to come through in the second half, then we could start to see a downturn overall,” said Larkin.

“But while large deals are important, it’s vital that early-stage firms and those looking to raise under €5m can source funding.”

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Vish Gain is a journalist with Silicon Republic