Irish SME funding post-crash breaks through the €3bn mark

10 May 2017

Regina Breheny, director general, IVCA. Image: John T Ohle

Irish tech firms raised close to €250m in Q1 2017, bringing the total raised since the credit crunch in 2008 to more than €3bn.

Version 1 led the way in venture funding in Ireland during the first quarter of 2017, with the Irish Venture Capital Association (IVCA) attributing more than one-third of the total money raised in the country to the software company.

With €246.7m raised in total, Version 1’s €90m – leading to the creation of hundreds of jobs – was the standout figure as the general funding scene rose 4pc on the same time last year.

Seed funding was a particular area of interest as the year began, with a rise in 36pc on the same period in 2016.

Alongside Version 1’s major haul, Atlantic Therapeutics (life sciences) and Blueface (telecoms) each raised €10m, while more than €8m went to undisclosed companies.

The IVCA report shows an air of positivity around Irish businesses, despite the ongoing confusion surrounding the UK’s exit from the EU.

“In the light of Brexit and other uncertainties, it is positive to see investment being maintained, especially as last year was a bumper one with the first quarter 2016 nearly double that of 2015,” said IVCA chair Michael Murphy.

Murphy claims that the main area of positivity is behind a drop in funding in the US and UK in Q1 2017, with the reductions around 12pc and 11pc, respectively.

“Nonetheless, the Irish VC industry is in fundraising mode at the moment,” he said, though, given 2016’s record year, it will be difficult to maintain this rate.

Michael Murphy, chairman, IVCA. Image: Chris Bellew/ Fennell Photography

Michael Murphy, chair, IVCA. Image: Chris Bellew/Fennell Photography

Regina Breheny, IVCA’s director general, said that the first quarter saw a continuing recovery in first-round seed funding, which rose to €33m.

The IT sector was the main player in this regard, with more than one-half of all seed funding raised entering into software or related fields.

The €3.1bn raised by SMEs since the 2008 credit crunch has been spread across 1,300 businesses, with an indigenous feel to the whole thing.

“These funds were raised almost exclusively by Irish VC fund managers who, during this period, supported the creation of up to 20,000 jobs,” said Breheny.

“[This] attracted over €1.37bn of capital into Ireland and geared up the State’s investment through the Seed and Venture Capital Programme by almost 16 times.”

However, it’s not all roses and daffodils in the start-up scene.

Brian Caulfield, who sits on the IVCA council, recently told that while he thinks Ireland is a “great place to be a company and actually, a pretty great place to be a start-up company”, it is also a “dreadful place to be an entrepreneur”.

He added: “We still tax entrepreneurs more and not less than PAYE workers, and I hope that the macro-political situation and the potential negative impact on FDI might finally convince the Government that we need a policy for entrepreneurship that extends beyond the efforts of Enterprise Ireland.”

Gordon Hunt was a journalist with Silicon Republic