VC funding into Irish SMEs falls by almost 40% to €190m in third quarter

Venture capital funding into Irish technology SMEs in the third quarter fell by 38% to €190m from €309m in the same period last year, according to the Irish Venture Capital Association in its Venture Pulse survey, published today in association with William Fry.

The IVCA said that third-quarter data “raised alarm bells” and that funding across almost most levels “fell significantly”.

“Following a strong first half, overall funding for the nine months to end September 2023 just about held up, with an increase of 6% to just over €1 billion, compared to the same period last year,” commented Denise Sidhu, chairperson of the Irish Venture Capital Association.

“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.” She added that the number of transactions fell by over a quarter (26%) compared to the same period last year.

As an example, she pointed to the value of deals in the third quarter in the €3-€5m range, which fell by over a third (34%) to €193.8m compared to almost €300m in the same time last year. The value of deals in the €5-€10m range dropped by over three quarters (76%).

Sarah-Lane Larkin, director general, IVCA, said that another worrying indicator was that the value of international VC investment in the third quarter fell by over two-thirds (69%) or by over €120m.

“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 Inc. to build local private funding sources in order to combat global dependence and headwinds.”

The largest deals in the third quarter were Ocuco (Software) €60m; Shorla Oncology (Life Sciences) €32m; UrbanVolt (Environment) €26m and ProVerum (Life Sciences) €15m.

Sectors most successful in raising funding in the nine months to the end of September 2023 included Envirotech or clean energy, which raised €580m or 50% of total VC investment, followed by Life Sciences at €157m (14%); Software €92m (7.9%); AI & machine learning €88m (7.6%); and Fintech €82m (7%).