Irish SMEs See 38% Drop in VC Funding in Q3
The latest Venture Pulse survey from The Irish Venture Capital Association in association with William Fry has revealed a concerning 38% decrease in venture capital funding for Irish technology SMEs in the third quarter, dropping from €309m to €190m. This sharp decline has raised alarm bells, with funding across almost all levels falling significantly.
- Envirotech or clean energy sector raised €580m, accounting for 50% of total VC investment
- Life Sciences sector secured €157m, representing 14% of the total funding
- Software sector received €92m, making up 7.9% of the total investment
- AI & machine learning sector and Fintech sector also secured substantial funding
- Overall funding for the nine months to end September 2023 increased by 6% to just over €1 billion compared to the same period last year
- Number of transactions fell by 26% compared to the same period last year
However, despite the third quarter downturn, the nine-month data shows that overall funding managed to hold up with a 6% increase compared to the previous year. Denise Sidhu, chairperson of the Irish Venture Capital Association, expressed concern over the significant drop in the value of deals across all sizes, except those under €1m. The survey also revealed a substantial decline in the value of deals in the €3-€5m and €5-€10m ranges.
Sarah-Lane Larkin, director general of IVCA, highlighted another worrying trend, with the value of international VC investment in the third quarter plummeting by 69%. This emphasizes the need for Ireland to build local private funding sources to combat global dependence and headwinds.
Despite the challenges, there were some notable deals in the third quarter, including the 460m Ocuco deal in the Software sector, the €32m Shorla Oncology deal in the Life Sciences sector, and the 426m UrbanVolt deal in the Environment sector.
While the third quarter data paints a concerning picture for Irish SMEs, the push for local private funding sources and the resilience of certain sectors offer hope for the future.