- VC funding in Irish start-ups and small businesses has fallen by nearly half in the first quarter of 2024 compared to the same period last year
- Despite the decrease, investment in the last three quarters has held up well against global uncertainty
- Seed funding and funding in the €1-3m deal size sector showed resilience in the latest quarter
- International funding into Irish SMEs fell by 57% in the first quarter, highlighting overreliance on foreign investors
- IVCA will advocate for Irish pension savers to invest in Irish start-ups under the planned auto enrollment scheme
Irish VC Funding Landscape in 2024
Venture capital funding in Irish start-ups and small businesses has experienced a significant decrease in the first quarter of 2024, marking a notable decline compared to the same period in the previous year. The Irish Venture Capital Association (IVCA) reported that VC funding in Irish SMEs totaled €258.5m in the first quarter of 2024, reflecting a 48% drop from the €502m figure in the first quarter of 2023. This decline follows a similar trend observed in the last quarter of 2023, indicating a challenging landscape for Irish firms seeking investment.
Impact of Global Uncertainty on Irish VC Funding
Despite the decrease in funding, IVCA Chair Denise Sidhu highlighted that investment in the last three quarters has shown resilience amid global uncertainty. While funding across various deal sizes experienced a downturn, seed funding exhibited particular strength. Very early-stage Irish SMEs secured a total of €40m in the quarter, with funding in the €1-3m deal size sector witnessing a 126% increase to €22.7m compared to the previous year’s €10m. Sidhu emphasized that the overall decrease in Irish funding aligns with global trends, which saw a 20% decline in the first quarter.
Challenges and Opportunities in Irish VC Ecosystem
The latest IVCA figures underscore the challenges posed by Ireland’s reliance on international funding. International investment in Irish SMEs decreased by 57% in the first quarter of 2024, dropping to €184m from €425m in the previous year. Sarah-Jane Larkin, director general of IVCA, acknowledged the support provided by state bodies like Enterprise Ireland and the Irish Strategic Investment Fund in fostering the growth of Irish companies. However, Larkin highlighted the need to address the overdependence on unpredictable international investors to propel start-ups to the next level of growth.
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In response to these challenges, Larkin advocated for initiatives to unlock domestic resources, such as the €150bn in household deposits, for productive use in the economy. She referenced Minister Michael McGrath’s comments on leveraging domestic savings for investment and proposed enabling Irish pension savers to invest in Irish start-ups through the planned auto enrollment scheme. This approach aims to emulate successful models implemented in other countries, like France, to bolster domestic investment in entrepreneurial ventures.
Key Trends and Opportunities in Irish VC Funding
Despite the overall decline in VC funding, several notable deals stood out in the first quarter of 2024, showcasing the resilience and potential of the Irish start-up ecosystem. Top deals included Mainstay Medical (€115m), GridBeyond (€52m), Halo Technologies (€18.4m), Mybronics (€17.5m), and Cumulus Neuroscience (€13m). Life sciences emerged as the leading sector attracting VC funding, accounting for 62% of investments, followed by envirotech (17%) and software (9%).
As the Irish VC funding landscape evolves, it is essential for stakeholders to address the challenges of international dependency and explore innovative solutions to mobilize domestic resources for sustainable growth. By fostering a supportive ecosystem that encourages local investment and nurtures homegrown talent, Ireland can position itself as a hub for innovation and entrepreneurship in the global marketplace.
Stay tuned for more updates on the evolving landscape of Irish VC funding and the opportunities it presents for entrepreneurs and investors alike.
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