While large Irish VC funding deals appear to be getting significantly less popular, smaller deals are on the rise.
The latest survey from the Irish Venture Capital Association (IVCA) revealed that overall funding in Q3 2019 dropped by as much as 20pc to €136m. The VenturePulse survey, conducted in partnership with William Fry, also showed that Ireland may not be as attractive a place for funding as it once was, with a 60pc drop in overseas investors in the last quarter and a 40pc drop in the year to date overall.
This, the IVCA said, can be attributed to the notable decline in larger deals above €10m so far this year. However, overall funding rose by 3.7pc from €546m to €566m in the first nine months of the year.
“There has been a notable decline in larger deals … But these deals are lumpy by nature,” said the association’s chair, Neil McGowan. “Thanks to Government support, there has been a strong recovery in seed funding and deals below €10m, which is very pleasing to see.”
There has been a 36pc increase in the number of companies securing investment up to €10m. This rose from 139 in the first nine months of 2018 to 189 during the same period in 2019. This figure is also up 11pc for the quarter versus the same period last year.
Seed funding in Q3 is also up by 30pc on this time last year, with the number of companies securing seed funding jumping by 90pc.
‘As a nation we should not be overly dependent on overseas investors but create the environment locally to create Irish multinational companies’
– SARAH-JANE LARKIN
Looking at sectors, software accounted for 34pc of all funding in the last quarter and life sciences accounted for 14pc. A surprise inclusion was the food and drink sector, which attracted 26pc of funding.
Speaking of the sharp drop in investment from overseas, IVCA director general Sarah-Jane Larkin said it emphasised a need to introduce policies to encourage growth in local private sector funding, similar to what happens elsewhere in Europe.
“Major overseas venture capital investors are less attracted by deals below €10m, which have characterised the Irish market this year,” she said. “While they remain an important player in the Irish market, as a nation we should not be overly dependent on overseas investors but create the environment locally to create Irish multinational companies.”
In 2018, venture capital funding into Irish technology firms fell by 25pc to €739m, according to the IVCA.