Irish tech start-ups reached a record €1.3bn in VC investment in 2021

13 Feb 2022

Sarah-Jane Larkin, ICVA. Image: Diane Cusack

The Irish Venture Capital Association’s survey reported a large increase in seed funding and the general size of investment deals in 2021.

Venture capital investment into Irish tech start-ups and SMEs reached a record €1.3bn last year, marking a 44pc increase from the previous year.

According to the VenturePulse survey from the The Irish Venture Capital Association (IVCA), investment momentum is on the rise with €458m in funding raised in the last quarter, the highest fourth quarter on record with more than three times the amount raised than the same quarter in the previous year.

IVCA chair Nicola McClafferty said seed or first-round funding, which is usually locally provided, grew by 60pc in 2021 to more than €130m.

“The indigenous tech start-up and SME sector appears to be well positioned to benefit from and contribute to a strong post-pandemic jobs recovery,” McClafferty said. “57pc of funding in 2021 came from overseas investors, highlighting the continuing appeal of Irish tech firms and their ability to compete on a world stage.”

The rise in early-stage funding for 2021 makes for a positive change in trends after IVCA’s figures for 2020 sounded alarm bells over a drop in seed and early-stage funding as investors opted to put their money into existing portfolio companies amid the pandemic.

The latest survey published today (13 February) in association with William Fry, found that the life sciences sector attracted the most funding in 2021 at 38pc. This continues a trend which saw it as the top destination for investments in an earlier IVCA report released in August 2021.

Software companies came second, getting 22pc of all investments, while fintech received 10pc and the ICT sector reached 6pc for the full year.

“We have never witnessed such a wide range of sectors raising venture capital or private equity, reflecting the fact that Irish high growth SMEs are now more broadly spread and diversified than in the past,” McClafferty added.

The volume of deals in 2021 increased by 20pc to 279, up from 233 the previous year. IVCA director general Sarah-Jane Larkin said this increase – combined with the 44pc rise in value – shows that Irish SMEs are raising larger funding rounds.

“The largest category increase was in deals between €10 and €30m, which rose by 66pc to €356m in 2021 compared to €214m the previous year,” Larkin added.

Deals in between €1m and €5m went up in the fourth quarter by 151pc reaching €68m. The only category to decline was deals of less than €1m, which went down 35pc.

Health-tech start-up LetsGetChecked’s $150m funding round in June and finance platform Wayflyer’s $76m funding round in May were among some of the largest investment deals in 2021.

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Leigh Mc Gowran is a journalist with Silicon Republic