Funds invested into Irish SMEs amounted to €1.35bn in 2023, or 2% up on the previous year, according to the Irish Venture Capital Association (IVCA) VenturePulse report, published in association with William Fry.
However, funding for the fourth quarter fell by 16% year-on-year to €204m.
IVCA chairperson Denise Sidhu said the first half of 2023 was extremely strong, with €960m of investment, but the H2 tally was much weaker, at €390m.
“This is not totally surprising in a year where VC funding globally fell by 38% in 2023,” said Sidhu. “It was a positive year and last quarter for start-ups looking to raise less than €5m, but it was far more challenging for firms seeking larger amounts.”
Funding in the €3m to €5m range increased by 36% to €40m in the final quarter compared with the same period in 2022. Deals in the €1m to €3m category grew 170% to €64m, deals below €1m grew by 8% to €8.6m, while seed funding increased by 58% to €64m.
Deals in the €5m to €10m range fell by 26% to €106m in 2023 from €142m the previous year. This trend accelerated in the fourth quarter with deals in this range falling by 100% to €32m.
It was a similar story in the €10m to €30m category, with funding falling by nearly a half (47%) to €208m in 2023 from €396m the previous year. Funding for Q4 fell by 49% year-on year to €30m.
Sidhu added: “This data highlights the risk of these highly innovative indigenous firms hitting a brick wall just at a critical time in their growth trajectory due to the lack of locally sourced scaling finance.
“We warmly welcome enterprise minister Coveney’s move to publish the report of the Finance for Scaling Working Group, which includes actionable recommendations to support high potential firms to access scaling finance.”
Sarah-Jane Larkin, director general at IVCA, stated: “Ireland Inc has become over reliant on scaling finance provided by international backers. International funding into Irish tech SMEs amounted to two thirds of the total for 2023, with €745m invested of the total €1.35bn invested in eight companies.”
She said that the sector breakdown for the year reflected innovative tech companies participating in new technologies. Envirotech accounted for 45% of total funds raised in 2023, followed by life sciences at 17% and software at 8%.
“Artificial intelligence and machine learning represented 7% or €98m of the total in 2023, almost at the same level of software, one of the traditional leaders in Irish funding,” Larkin said.
Photo: Denise Sidhu, IVCA. (Pic: Fennells)
