Venture capital funding into Irish tech companies increased by 52% to €379.7 million in the first quarter of 2022, when compared to €249.4 million in same period last year, according to the Irish Venture Capital Association VenturePulse survey published recently in association with William Fry.
But chairperson of the Irish Venture Capital Association, Nicola McClafferty, said that the headline figure “concealed a ‘potentially worrying fall’ of 30%-50% across all categories under €10m, including seed funding.”
The number of deals overall “fell by almost a third to 50 from 74 in the same period last year.”
She stated:
“All the growth came from eight deals worth over €10m each, including three over €30m. While the momentum carried over from last year has continued for more established companies raising large rounds, some of that impetus seems to have stalled for earlier stage companies.”
She noted:
“The venture industry worldwide saw a slowdown in the first quarter as a result of an uncertain global economic outlook and the war in Ukraine. While challenging market conditions may continue, we also know that many great companies are started and built in times of downturn, so we await with interest the data in the coming quarters.”
The value of deals between €5-€10m “fell by 51% to €11m.”
Deals in the €1-€5m also “halved to €34.5m from €70.3m in the same period last year. Deals under €1m dropped by 31% to €8.9m.”
Sarah-Jane Larkin, director general, IVCA said that 79% of funding “came from international sources in the first quarter.”
“While this is to be welcomed and emphasises the quality of Irish tech firms and their appeal to international investors, we have expressed concern before about where any shortfall would be made up if the global economy contracts.”
She pointed out that seed funding in the first quarter “had fallen by nearly 40% to €22.3m from €36.5m in the previous year.”
As noted in the update, the Government’s announcement in February of a new €90 million Irish Innovation Seed Fund Program for Irish startups “is particularly timely.”
Top deals in the first quarter “were two Irish unicorns, fintech company Wayflyer which raised €134m, and digital food ordering platform Flipdish (€94m). Envirotech company Exergyn raised €32.7m.”
The Irish Venture Capital Association VenturePulse survey “is recognized as the definitive source of fundraising activity in Ireland by the VC industry and by government and international bodies including the OECD.”
The data covers equity funds raised by Irish SMEs and other SMEs headquartered on the island of Ireland “from a wide variety of investors.”
This research is “the result of detailed information supplied internally by members of the Irish Venture Capital Association and from published information where IVCA members were not involved.”
As noted in a blog post, the Irish Venture Capital Association is “the representative organisation for venture capital and private equity firms in Ireland.”
An independent DCU report released in January 2020 “found that Irish venture capital and private equity firms have invested €5bn in Irish SMEs since 2003 and, through syndication, have attracted in a further €3bn in funding from international firms.”
This supported the state’s investment through its agencies’ Enterprise Ireland and the Irish Strategic Investment Fund and “geared up investment through the Seed & Venture Capital Programme by almost 16 times.”
