IVCA Chairman Dennis Sidhu said the drop in funding was not surprising as it was consistent with a global decline in VC funding, according to the group’s latest report.
Investment in Irish SMEs reached a record high of €1.35 billion in 2023, but fell by 16% year-on-year in the last quarter.
This is according to the latest figures released by the Venture Capital Association of Ireland in its VenturePulse report today (25 February).
The report, released in partnership with law firm William Fry, found that although annual investment rose by a record 2% from 2022, more money flowed into small businesses in the fourth quarter than in the same period last year. It turned out that it was only 204 million euros compared to 244.6 million euros in 2017. .
Dennis Sidhu, chairman of the Irish Venture Capital Association (IVCA), said this drop in funding was not surprising as it coincided with a global decline in VC funding.
Irish tech companies raised more than €963 million in VC funding in the first half of last year, a record 24% increase on the €778 million raised in the first half of 2022. However, the latest data shows a significant decline in the second half of the year. For just 394 million euros.
“Companies hitting a brick wall”
Sidhu said the IVCA report shows “different fortunes” for companies at different stages. “While the year and last quarter were strong for startups looking to raise less than €5 million, it was a much more difficult year for companies looking to raise more,” she said. .
Transactions in the €5 million to €10 million range fell by more than a quarter (26%) over the year. This decline accelerated alarmingly last quarter, with transactions in this range dropping by 100% compared to the same period in 2022. The same was true for transactions in the €10 million to €30 million range, which declined by almost half both over the year and throughout the year. In the last quarter.
“This data highlights the risk that these highly innovative indigenous companies will hit a wall at a critical point in their growth trajectory due to a lack of locally sourced expansion capital,” Sidhu added.
On a more positive note, funding in the €3 million to €5 million range increased by more than a third (36 percent) in the last quarter, while deals in the €1 million to €3 million category increased by 170 percent. transactions under 1 million euros increased by 8 percent. 8.6 million euros.
According to the report, the top five deals last quarter were dominated by EasyGo, Luma Vision, Cloudsmith, Alvarius, and OOHPod.
“Ireland Inc. has become overly reliant on significant but temporary scale-up funding provided by international backers. 745 million euros, or 55% of the total of 1.35 billion euros, was invested in eight companies,” said IVCA Director General Sarah Jane Larkin.
“Artificial intelligence and machine learning will account for 7% of the total or €97.8 million in 2023, roughly on par with software, making it one of the traditional leaders in Irish funding.”
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