VC investment into Irish SMEs grew by 11% to €820m in 2019

Venture capital funding into Irish SMEs grew by 11% to €820m in 2019, compared to €740m the previous year, according to the Irish Venture Capital Association VenturePulse survey published today in association with William Fry. Technology companies raised 87% of funding last year.

The annual growth was stimulated by a record fourth quarter where funding grew 120% to €253m from €115m in the same period last year.

“While 2019 was below the peak of €994m in 2017, a small number of large deals can have a significant impact – overall it is encouraging to see growth over last year,” commented Neil McGowan, chairman, Irish Venture Capital Association (IVCA). “We hope that the impressive fourth-quarter results suggest that continued momentum.”

He said that the growth had extended into seed or early-stage companies where funding was up 55% to €76m in 2019 compared to €49m in the previous year.

“The impact of Enterprise Ireland’s new €175m Seed & Venture Capital Scheme (2019-2024) is starting to be felt in the Irish marketplace which is to be welcomed.”

Sarah-Jane Larkin, director general, IVCA said that there had been growth across all deal sizes during the year and an increased prevalence of private equity but of particular interest was the rise of 175% in the value of deals between €5-10m.

Funding in the €5-10m category grew to €102m in 2019 from €37m the previous year. The number of companies availing of this level of funding grew to 16 in 2019 from five the previous year.

“This is important as these amounts are typically raised by scaling companies who are at a critical stage in terms of expansion in employment and revenues,” said Sarah-Jane Larkin. “At a time when a programme for Government is being considered, it is important that policymakers recognise the need to help create the right environment for local entrepreneurs to build a knowledge-based indigenous Irish economy.”

She referred to a recent DCU report which found that employment in venture capital and private equity-backed firms increased by an average of 27% per annum over a three year period from 2016. This compares to an overall increase in employment in the economy of 3.3% per annum over the same time frame.

Software companies raised 39% of funds in 2019 followed by life sciences at 20% of the total. There were also strong contributions from the fintech and cybersecurity sectors.