Venture capital funding falls in first half of 2019

IVCA notes 5% decline despite strong second quarter

Trade

Sarah-Jane Larkin, Irish Venture Capital Association

New figures show that the dip in venture capital funding is beginning to recover. Research from the Irish Venture Capital Association (IVCA) found that funding to Irish tech firms fell by 5%, to €430 million in the first half of 2019. However, it rose by 90% in the second quarter, with €233 million raised from April to June.

“While funding in the first half was down, it rebounded strongly in the second quarter compared to last year. However, it should be noted that investment in the second quarter of last year was particularly low. With government policy input we hope the recovery can continue,” said Neil McGowan, chairman, IVCA.

Software accounted for 45% of total funding in the first six months of the year, followed by life sciences, at 25%. For the first time, fintech investments accounted for near 10% of total funding.

The number of companies raising funds has increased by almost 50%; moving from 93 in the first half of 2018 to 139 to June this year. Sarah-Jane Larkin, director general, IVCA (pictured) said that this is reflected in the positive underlying trend. Vital seed funding to early stage companies rebounded strongly, more than doubling to €38 million in the first half of 2019 from €16 million in the same period last year, she said.

Larkin added that since the financial crisis in 2008, more than 2,500 Irish SMEs have raised venture capital and private equity of €5 billion.

These funds were raised almost exclusively by Irish VC and PE fund managers who during this period supported the creation of up to 20,000 jobs and attracted over €2.5 billion of capital into Ireland.

“In the light of so many international economic uncertainties it is vital to grow and encourage our indigenous base in an environment where we are probably over reliant on foreign direct investment,” said McGowan. “This dependence is reflected in the fact that multinational companies contributed 77% to last year’s corporation tax take.”

The IVCA is the representative organisation for venture capital and private equity firms in Ireland.

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