Venture capital funds raised by Irish SMEs hit record €1.35bn in 2023
Funds invested into Irish SMEs reached €1.35 billion 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% to €204 million, from €244.6 million in the same period last year.
“The first half of 2023 looked extremely strong with €963 million of investment, however the second half saw a marked decrease with only €394 million. This is not totally surprising in a year where VC funding globally fell by 38%1 in 2023 and by 25% in the final quarter compared to same period in 2022,” commented Denise Sidhu, chairperson, IVCA. “It was a positive year and last quarter for start-ups looking to raise less than €5 million, but it was far more challenging for firms seeking larger amounts.”
Sidhu pointed out that deals in the €5-€10 million range fell by more than a quarter (26%) to €105.5 million in 2023 from €142 million the previous year. This trend accelerated in the fourth quarter with deals in this range falling by 100% to €31.8 million from €64.6 million, compared to the same quarter in 2022.
It was a similar situation in the €10-€30 million category with funding falling by nearly a half (47%) to €208 million in 2023 from €396 million the previous year. Funding for quarter four also fell by almost a half (49%) to €30 million from €59 million in the same quarter in 2022.
Sidhu said: “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.”
Sarah-Jane Larkin, director general, IVCA, added: “Ireland Inc has become over reliant on critical but transitory scaling finance provided by international backers. International funding into Irish tech SMEs amounted to two thirds of the total for 2023. €745 million, or 55% of the total €1.35 billionn, was into eight companies.”
She said that the sector breakdown for the year reflected Irish innovative tech companies participating in new technologies. Envirotech raised €612 million or 45% of total funds raised in 2023, followed by life sciences at €224.5 million (17%) and software at €110 million (8%).
Funding in the €3-€5 million range increased by over a third (36%) to €40 million in the final quarter compared to the same period in 2022. Deals in the €1-€3 million category grew 170% to €63.7 million. Deals below €1 million grew by 8% to €8.6 million while seed funding also performed well, increasing by 58% to €63.6 milion.
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