VC funding report shows ‘renewed appetite’ for early-stage Irish start-ups

22 Nov 2021

Nicola McClafferty. Image: Chris Bellew/Fennell Photography

The latest Irish Venture Capital Association survey shows renewed investment into early-stage companies.

Venture capital funding into Irish start-ups and SMEs has shown positive growth in the third quarter of this year, a new report has found.

VC funding into Irish SMEs increased to €231m in Q3 2021, a 19pc increase compared to Q3 2020’s €193m, according to the VenturePulse survey from the Irish Venture Capital Association (IVCA).

The report, published in association with William Fry, also found that total funding into SMEs for the first three quarters of the year has reached €872m, up 11pc, with tech firms seeing the glut of this investment.

A key feature for this quarter was recovery in funding for start-ups, as seed funding rose by 63pc from last year, reaching €31m.

Deals in the range of €1m to €5m increased by 89pc to a total of €76m in Q3 2021. The majority of these were under €3m.

IVCA chair Nicola McClafferty said: “In the early stages of the pandemic, many venture capital companies looked to back their existing investments and well-established companies. Having managed that, there is a renewed appetite to focus on opportunities in early-stage companies.”

While deals in the €5 to €10m range showed little change from last year, investments over €10m more than tripled from €22m to €71m.

IVCA director-general Sarah-Jane Larkin said this was a solid quarter with no outlier deals, since there were no investments over €30m.

Larkin believes this positive outlook for start-ups will be enhanced next year by the Government’s planned €90m innovation fund for early-stage start-ups, along with changes to the Employment Investment Incentive Scheme.

Larkin added: “One consequence of the pandemic is increased interest in entrepreneurs and tech firms which have ideas relating to health as well as the digital economy.”

Life sciences companies have received 38pc of VC investment this year, followed by software at 24pc and fintech investments at 11pc.

Environmental companies have made an entry to the ranking in the third quarter of 2021, representing 12pc of the total.

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Leigh Mc Gowran is a journalist with Silicon Republic