Venture capital funding increases almost 20% in third quarter

Nicola McClafferty, Draper Esprit
Nicola McClafferty, IVCA

IVCA data highlights positive outlook for start-ups and early-stage companies

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22 November 2021 | 0

Venture capital funding into Irish SMEs increased by 19% to €231 million in the third quarter of 2021, compared to €193 million last year, according to the Irish Venture Capital Association VenturePulse survey published in association with William Fry.  

Funding into SMEs, mostly tech firms, for the nine months to end September 2021 reached €872 million, up 11% from €786 million last year. 

Nicola McClafferty, chairperson, Irish Venture Capital Association (pictured), said that a feature of the third quarter was a recovery in funding for start-ups. Seed funding, which typically represents first investments by equity investors, rose by 63% to €31 million from €19 million. 

 

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“In the early stages of the pandemic, many venture capital companies looked to back their existing investments and well-established companies. Having managed that, there is a renewed appetite to focus on opportunities in early-stage companies.” 

McClafferty said this is reflected in fact that in the third quarter, deals in the €1-5 million mark increased by 89% to €76 million from €40 million. Of these, the majority were under €3 million. 

Sarah-Jane Larkin, director general, IVCA said that the positive outlook for start-ups is enhanced by the government’s Budget 2021 changes to the Employment Investment Incentive Scheme (EIIS).  

“In addition, the planned €90m innovation fund, due to be launched early next year and focused entirely on early-stage enterprises, should have a really positive impact on new and emerging companies. One consequence of the pandemic is increased interest in entrepreneurs and tech firms which have ideas relating to health as well as the digital economy.”  

Deals in the €5-10 million range in the third quarter at €70 million showed little change from last year. Investments over €10 million more than tripled to €71 million from €22 million. 

Larkin added that there were no deals in the €30 million plus range: “So this was a solid quarter unaffected by an outlier mega deal.” 

For the year to date, life sciences accounted for 38% or €329 million of total funds raised, followed by software at almost a quarter, 24% (€207 million) and fintech at 11% (€96 million). 

In the third quarter, environmental industries made an entry, representing 12% of the total. 

TechCentral Reporters


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