Annual VC funding into Irish SMEs fell for first time since 2018

Annual venture capital funding into Irish tech SMEs fell for the first time last year since 2018, according to the Irish Venture Capital Association (IVCA) VenturePulse report, published today in association with William Fry. Funding in 2025 was down by 23% to €1.1 billion. Funding in the fourth quarter fell by 46% to €291.4 million.

“It’s been a roller coaster year for Irish SMEs looking to raise capital,” commented Caroline Gaynor, chairperson, IVCA. She said that there had been an undoubted Trump effect after uncertainty caused by tariffs led to the worst second quarter for ten years.

“In addition, the fourth quarter saw a 71% retreat from the Irish market by international investors from €470m to €132.4m. This may be due to hesitation and uncertainty by US VC firms due to a number of factors, including an ‘America first’ focus, negativity from across the Atlantic about Europe, and the impact of a weakening dollar.”

However, despite these headwinds, the IVCA chairperson said that she remained positive about Irish entrepreneurs looking to raise capital in 2026. “The Government’s Seed and Venture Capital Scheme 2025-29 (1) has a record allocation of €250 million, and we should see the benefits kicking in shortly. In addition, progress is being made on the Government’s important enterprise scaling fund (2) as well as other policy measures to mobilise capital to Irish SMEs.”

She added: “Current geopolitical events have highlighted the need for us to be more self-reliant, have more access to local capital, and not be dependent on overseas investors to fund our indigenous tech sectors.”

Sarah-Jane Larkin, director general, IVCA, said that the fourth quarter highlighted the weakness of not being able to tap into local private capital. “A major reason for the 46% decline in fourth quarter funding was the 71% fall off in international investment.”

She added, “Another reason for the decrease in international funding may be that US investors may be overly focused on local AI opportunities, and certainly, the amount of money being invested there is sucking up a lot of venture capital. Unicorn status is being achieved by early-stage start-ups in generative AI in the US much quicker than in the past.”

Ms Larkin said that the decline in overseas funding in 2025 is reflected in the 33% fall in larger deals in the €30m + category to €540.8m. In the fourth quarter, this category fell by more than two-thirds (69%) to €111m. Funding in the €10m–€30m range for the year overall also fell, by 14% to €269.4m.

The IVCA data suggests that transactions for smaller rounds held up reasonably well in 2025. Funding in the €3m-€5m category rose by 39% to €113.8m. There was a small decline (3%) in the €1-€3m range to €102.2m. Seed funding, or first rounds raised by SMEs, dropped by 5% to €141m.

The top five deals in quarter four were quantum computing company, Equal 1, which raised €30m; Shorla Oncology (speciality pharmaceuticals, €25m); Aerska (biotech, €17m); Fresco (smart kitchen platform, €15m) and Luminate Medical (healthcare technology, €14m).

Life science companies attracted most funding in 2025 in Ireland, raising €461m or 40% of the total. This was followed by software with €156m (14%); cybersecurity €136m (12%); AI and machine learning €104m (9%) and fintech €96m (8%).

186 deals were completed in 2025, down from 217 the previous year, a fall of 14%.