Venture capital investment in Irish tech firms fell by a quarter in 2018

Sarah-Jane Larkin, IVCA
Sarah-Jane Larkin, IVCA

IVCA figures show lower average deal size, smaller number of large deals

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22 February 2019 | 0

Funding into Irish technology firms fell by 25% to €739 million in 2018 according to the Irish Venture Capital Association VenturePulse survey published in association with William Fry.

The fourth quarter of 2018 showed a decline in funding of 35% to €115 million, continuing the trend of previous quarters.

“The fourth quarter did contain some hopeful green shoots with regard to seed funding,” said Alex Hobbs, chairman, IVCA.

“Seed funding rebounded strongly in the final quarter achieving its highest quarterly total of nearly €20 million across 50 companies. But this has not compensated for a decline overall which is a concern at a time of international uncertainty when we should be investing in indigenous tech companies.”

Hobbs said that the underlying figures were even more worrying. “If you strip out the two investments in 2018 and the one in 2017 of more than €100 million then the decline year on year was 40%.”

The average deal size in 2018 fell from €3.5 million to €3.2 million driven by a decline in larger investments of more than €10 million. These were down 30% on 2017 levels with companies in this category raising €432 million in 2018 compared to €610 million in 2017. Only 12 companies raised more than €10 million in 2018.

“While the rebound in seed is encouraging, we need to ensure there is sufficient access to later stage capital for those companies in the future as they look to scale and create more jobs,” said Sarah-Jane Larkin, director general, IVCA (pictured).

“The Irish venture capital community continues to be the main source of funding for Irish innovative SMEs both through direct investment and as the local lead investor for international syndicate investors who accounted for 50% of the funding raised by Irish SMEs in 2018.”

Since the onset of the credit crunch in 2008, more than 1,550 Irish SMEs have raised venture capital of €5.5 billion. These funds were raised almost exclusively by Irish VC fund managers who during this period supported the creation of up to 20,000 jobs; attracted over €2 billion of capital into Ireland and geared up the state’s investment through the Seed & Venture Capital Programme by almost 16 times.

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