Irish start-up deals drop to lowest first quarter total since 2016

28 May 2020287 Views

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New research from Refinitiv indicates that Irish start-ups have seen fewer deals in recent months as the coronavirus pandemic hit.

Financial markets data and infrastructure business Refinitiv has released new research indicating that the coronavirus may have had a significant impact on Irish start-ups in the first quarter of 2020.

Refinitiv said the number of start-up funding deals for Irish companies fell to its lowest first quarter total since 2016. It said eight deals took place in the first three months of the year raising €18m, which is down from 10 deals in Q1 2019 that raised €85.8m.

‘It’s been a disappointing first quarter for enterprise in Ireland as coronavirus continues to take its toll on start-up investment’
– BEBHINN DUNN

This represents a 79pc fall in value and a 20pc fall in volume year on year. Deal value also fell to its lowest first quarter total since Q1 2014, when €8.4m was raised.

‘Disappointing first quarter’

Refinitiv said that the largest deal to take place in the first quarter of the year was Cubic Telecom raising €11m, followed by Payslip’s €2.7m raise, and Cerebreon Technologies raising €1.7m.

According to the research, the most active investors in Ireland during this quarter were Act Venture Capital, which invested €11.4m in two deals, followed by Elkstone Capital Partners, which invested €430,000 in two deals.

Refinitiv’s country manager for Ireland, Bebhinn Dunne, said: “It’s been a disappointing first quarter for enterprise in Ireland as coronavirus continues to take its toll on start-up investment as we’ve already seen with global M&A.

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“Despite the easing of lockdown, we expect investment to continue to fall into Q2 and beyond as the economy and business environment slowly begins to recover.”

Dunne said it “wouldn’t be surprising” to see investors pivot towards start-ups that enable remote working, connectivity or pharmaceuticals as they try to find investment opportunities that won’t be negatively affected by the global health crisis.

The landscape for start-ups in Europe

Across Europe, Refinitiv reported that venture capital activity totalled €4.8bn across 294 rounds during the first three months of 2020. This marked a 24pc decline in value and a 29pc decline in volume compared to the same period last year, but remained the second strongest opening quarter on record from a value perspective.

It said there were 11 venture capital rounds worth more than €100m completed during Q1, with Revolut topping the list with its €462m investment round in February. This was followed by co-living start-up Colonies, which raised €180m, and the €169m invested into fintech platform Purely Capital from an undisclosed investor in March.

According to Refinitiv, venture capital funds within the borders of Europe invested €2.7bn into domestic start-ups in the first quarter, accounting for 62pc of total disclosed investment. Around €1.3bn was invested from funds within the US, making up a 30pc share, and €218m was from Asia-based investors.

European venture-backed exits totalled €10.5bn across 35 transactions in the first three months of 2020, which is a 1,400pc increase in value when compared to 2019. It also marks a 30pc uptick in exit volumes compared to the same period in 2019.

The report noted that a large contribution to this increase was the completion of Just Eat’s acquisition by Takeaway.com, a deal valued at €7.3bn.

Kelly Earley is a journalist with Siliconrepublic.com

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