Last year was a difficult year for start-ups and investors due to macroeconomic conditions worsening.
A combination of high inflation, rising interest rates, weak economic growth, and the war in Ukraine affected investor sentiment in Ireland and across Europe.
Fears of recessions have dampened investor spending as rising costs and weaker growth forecasts had penetrated several businesses.
Ambitious start-up businesses had been unable to pursue growth at all costs and were scrambling for funds to keep their scaling plans on track.
This was the value of Silicon Valley Bank, it catered exclusively for high-risk fast growth businesses, providing funding where high street banks wouldn’t go.
Valuations for the larger as well as the smaller tech companies fell across the board as investors recalibrated the risks.
Putting the picture in the broader context, investment in start-up companies in 2022 across Europe declined by 25% compared to record levels in 2021.
Much of the slowdown was concentrated in the second half of 2022, according to an analysis of Crunchbase data.
However, as venture capital investment in start-up companies tumbled last year, the investment levels for female founders continued their upward path, albeit from a very low base.
Venture capital funding for
female-founded or co-founded companiesin Europe remains very low, accounting for only 2% of total funds invested.
But here in Ireland the creation of several women-led funds, incubators for female founders have pushed the scene over the past few years, enabling female founded start-up companies to extensively beat the European trend.
The lion’s share of venture capital funding into female founded companies went to Dublin based start-ups, with female ventures in Cork as the second most popular ahead of Belfast where female ventures.
Elaine Sullivan founder of Carrick Therapeutics has been last year’s leading light for female start-up companies in Ireland.
Carrick has a pipeline of pharmaceutic products under development of particular interest to Pfizer, a major investor in Carrick in 2022, including a treatment for patients with advanced breast cancer.
On overall international ratings, Ireland compares favourably with other European countries in terms of venture capital raised per head of population and ahead in terms of the amount of funding for female entrepreneurs. But the outstanding location for female venture capital funding continues to be the UK.
The British government’s rapid move to enable HSBC’s purchase of Silicon Valley Bank’s British arm in the past week is clearly an attempt to prevent contagion and collapse of some of its most promising start-ups, but is also geared to boosting its reputation for attracting high-growth technology and life sciences companies.
While female founders have grown their share of European and Irish deals and capital invested, the increase is still relatively small in terms of investment in male only start-ups.
More role models, like Elaine Sullivan of Carrick and Dr Ciara Clancy, founder and CEO of Beats Medical, the winner of the EU Women Innovator award last December, are needed to encourage more females into the fray. But also, there needs to be more women with decision-making power in venture capital firms.
It has been proven that women are three times more likely to invest in other women.
Across the board, the start-up business community in Ireland has raised more investment in recent years, primarily focused on early-stage funding.
The influx of US venture capital in the market has been a key part of the growth in recent years, and as seen in the case of Carrick Therapeutics, is a critical part of the funding for female company founders.
But these US investors have most of their portfolio in the US market. The worry is that the Silicon Valley Bank closure and its wider ramifications, could take some attention away from investing in Irish ventures.