VC funding into Irish SMEs falls by 10% to €578.4m in first half

Venture capital funding into Irish SMEs fell by 10% to €578.4m in the first half of 2026, according to the Irish Venture Capital Association VenturePulse survey published today in association with William Fry. While the second quarter showed an increase of over 200% to €356.7m, this compares to the same period last year, which was the worst in ten years.

Richard Watson, IVCA chairperson, said: “International investment as a percentage of the total reached 82% for the first half and 80% for the quarter. These levels are flashing red warning signals as they represent some of the highest on record and emphasise our overexposure to overseas investors.”

He added that ongoing global geopolitical instability, including the Iran war, as well as US capital concentration in mega AI deals, could well impact future international VC investment into Ireland. “Just two frontier AI companies, Anthropic and OpenAI, sucked up 43% or $217 billion of global start-up funding in the first half.”

Sarah-Jane Larkin, director general, IVCA, said that all deal ranges in Ireland below €5m fell in the first half. “This and the lack of any deals in the €10-30m range in the second quarter highlight the extent to which the dearth of domestic sources of funding is limiting capital formation, even with the support of the Seed & Venture Capital Scheme.”

Deals between €3-€5m fell by 58% to €21.5m from €50.7m in the same quarter last year. Seed funding, or first rounds by SMEs, fell 23% to €50m.

Life sciences and fintech companies led the way in funding in the first half of the year in Ireland, both accounting for 26% of the total; followed by cybersecurity and software (both 14%).

AI and machine learning represented 7% of the first half total. “This does not mean we are being left behind in AI,” commented Sarah-Jane Larkin. “It is unrealistic to expect a small nation like Ireland to produce the giant platform and frontier AI leaders of the US. But AI is now embedded in the products and services of the vast majority of local VC backed SMEs.”

Two companies, fintech provider Fonoa (€94.4m) and cybersecurity firm Cloudsmith (€61.5m) accounted for almost 44% of the Irish second quarter total. Other major rounds in the quarter were SaaS provider CameraMatics (€49m) and drone delivery company Manna (€43m).