Irish venture capital saw a sharp drop in third quarter

19 Nov 2023

From left: Sarah-Jane Larkin and Denise Sidhu. Image: Fennell Photography

The value of deals across start-ups of all sizes fell significantly, with the exception of those under €1m, according to the latest IVCA third quarter report.

There was a sharp decline in the value of VC deals in Ireland in the third quarter – dropping 38pc from the same period last year – while the number of transactions fell by more than a quarter, according to the Irish Venture Capital Association (IVCA).

This is in stark contrast to the previous IVCA report on the first half of this year, which saw a record €963m in VC investment representing a 24pc increase over the same period last year, a statistic that well outperformed global funding trends.

“Ireland only broke the €1bn threshold for a full year for the first time in 2021, yet we are close to that in 2023 for the half year,” said Denise Sidhu, who was recently appointed as IVCA chair, at the time.

This time around, even though we’ve crossed the €1bn threshold, the mood is very different.

“Following a strong first half, overall funding for the nine months to end September 2023 just about held up, with an increase of 6pc to just over €1bn, compared to the same period last year,” Sidhu said at the launch of the report today (19 November).

“However, the Irish third quarter data raises alarm bells, as the value of deals across all sizes fell significantly, with the exception of those under €1m.”

The value of deals in the €3-5m range fell by more than a third while those in the €5-10m range dropped by more than three-quarters.

The largest VC funding deals in the third quarter were software start-up Ocuco, which raised €60m, life sciences start-up Shorla Oncology, which raised €32m, solar start-up UrbanVolt, which raised €26m, and medical start-up ProVerum, which raised €15m.

Sarah-Jane Larkin, director general of the IVCA, said that another worrying indicator from the third quarter was that the value of international VC investment fell by more than two-thirds.

“The reliance on international VC investors at a time when US venture capital and private equity investment has slowed significantly emphasises the need for Ireland to build local private funding sources in order to combat global dependence and headwinds.”

Last week, Sidhu told that companies backed by international funding often build out their business and services in the market close to their investors, thereby reducing their footprint in Ireland.

“It also exposes Ireland to geopolitical risk and fluctuations in global capital allocations, this funding can be quick to recede when the global economy contracts,” she explained.

Sectors that were most successful in raising funding so far this year include clean energy, which raised half of total VC funding, followed by life sciences, software, AI and machine learning, and fintech.

“Generative AI, medtech, fintech, cybersecurity and other deep-tech innovations will provide the technologies and companies that propel our economic future,” Sidhu added last week.

“If we are unable to fund our own leaders in these technologies, we risk having our economic future dictated by interests outside of Ireland.”

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Vish Gain is a journalist with Silicon Republic