The Irish Venture Capital Association (IVCA) has released new data indicating that venture capital funding for Irish small and medium-sized enterprises (SMEs) neared a record €494 million in 2024’s second quarter.
However, while seed financing remained sturdy, the VenturePulse survey highlighted a shortage of funding for transactions less than €10 million. The total funding for the first half of the year decreased by 22 per cent, equal to €752.7 million. This reduction was primarily due to a report in H1 2024 stating that venture capital financing for Irish SMEs dropped by 48 per cent in the Q1 to €258.5 million. Conversely, this slump was somewhat mitigated by a 7 per cent increase observed in Q2.
Across various sectors, life sciences procured the highest funding during H1, amounting to €297 million or nearly 40 per cent of the aggregate capital raised. The next notably funded sectors were envirotech (13%), regtech (12%), and fintech and software both securing 9% each. Notwithstanding the buzz around technology, AI and machine learning ventures made up only 4 per cent of the total capital raised in H1.
The total seed funding swelled by 79 per cent to €93.6 million in H1, with Q2 seeing a rise of 18 per cent to €53.2 million. According to Gerry Maguire, chairperson of the IVCA, companies successfully gathered early-stage seed capital, but struggle to thrive in the next critical growth phase.
Other areas seemed less resilient. Deals less than €1 million marked a 20 per cent drop in Q2, and deals from €1 million to €3 million and €3 million to €5 million decreased by 21 per cent and 10 per cent respectively. Moreover, transactions in the €5 to €10 million bracket reduced by 44 per cent YoY in Q2, signalling a “troubling pattern”, as per the IVCA.
Significantly, international investors supplied more than 90% of the investment for deals above €10 million, particularly notable ones being a €70.3 million investment in life sciences corporation SynOx Therapeutics, fintech enterprise AccountsIQ’s €60 million deal, and a €50 million deal for cybersecurity experts, Tines. During the same period, Corlytics brokered a significant deal, though its exact value remains undisclosed.
Mr Maguire emphasised the dependency on foreign investors, stressing the necessity to stimulate growth finance from local investors. He praised Irish companies for their high standards and ambitious nature, but reinforced the significance of robust, large scale Irish funds able to lead or participate in investment rounds.
Sarah-Jane Larkin, IVCA’s Director General, stated that the resilience in seed funding has been persistent, largely attributed to governmental policies aimed at fortifying early stage financing. Larkin, speaking on behalf of the IVCA, expressed her anticipations for the report from the Implementation Committee, established by Peter Burke – the Minister for Enterprise, Trade & Employment, intending to help these burgeoning, high-potential startups progress further by improving their avenues to financing for growth scaling.
The information for the Irish Venture Capital Association VenturePulse survey is drawn from internal data supplied by IVCA members and from publically available data, where non-IVCA members were a part of the financing.