Uptick in early-stage funding deals starts 2021 on ‘positive’ note

9 May 2021

Gillian Buckley, chair of the IVCA. Image: IVCA

Figures from the Irish Venture Capital Association show that seed and early-stage deals have recovered partially after a tough 2020.

Early-stage funding deals in Ireland saw a slight bounce back in the first quarter of 2021 after a worrying decline in 2020.

Overall funding in the first quarter of the year, according to deals tracked by the Irish Venture Capital Association (IVCA), stood at €249.4m. This is up 8.9pc from the same period in 2020.

“Funding appears to have shaken off any restrictions caused by Covid-19,” Gillian Buckley, chair of the IVCA, said.

The organisation tracked 74 tech deals in the quarter, up from 48 a year prior, “largely driven by a welcome recovery in early-stage funding”.

The uptick in early-stage funding makes for a 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.

“We hope the more positive outcome in the first quarter is a harbinger of recovery for early-stage funding in 2021,” Buckley said.

Deals valued between €1m and €5m were up from €38m to €70.3m, meanwhile deals under the €1m mark were up from €8.4m to €12.9m year on year.

Some investment rounds that fell into these categories in the quarter were GoContractor’s $5m funding round and Klir raising $3.1m. Both start-ups are focusing heavily on the US market and raised mostly from US investors.

In February, Dublin and London-based fund Frontline Ventures announced a €70m fund to back European start-ups at the seed stage that have internationalising on their minds.

For many early-stage start-ups there is still a reliance on Government funding, namely through Enterprise Ireland, to get their business up and running.

“Government support for start-ups and early-stage companies through Enterprise Ireland and Ireland Strategic Investment Fund is beginning to show a real impact,” Sarah-Jane Larkin, director general at IVCA, added. “Without this, it is unlikely we [would] be seeing the growing importance of sectors such as life sciences to the Irish economy.”

Some of the bigger funding deals in the first quarter included Mainstay Medical raising around €89m, Flipdish’s €40m raise from Tiger Global Management and Galway’s Neurent Medical raising $25m.

According to IVCA, life sciences accounted for 52pc of deals in the first quarter, with software and cybersecurity making up 19pc and 9pc respectively.

Jonathan Keane is a freelance business and technology journalist based in Dublin