Venture capital funding falls by 9% to €453m in first half – IVCA report
– First fall in funding since 2011
– Drop fuelled by weak second quarter
-IVCA says figures represent a wake up call
Dublin; Thursday, 20th September, 2018: Venture capital funding into Irish tech firms for the first half of 2018 fell by 9% to €453m according to the Irish Venture Capital Association VenturePulse survey published today in association with William Fry. This is the first time that venture capital funding has fallen since the 4th quarter 2011.
“The downturn was triggered by a significant decline in the second quarter when funding dropped by over 50% to €121m compared to €252m in the same period last year,” commented Alex Hobbs, chairman, Irish Venture Capital Association.
50% of the total figure for the second quarter was accounted for by one deal – the €64m funding round secured by Sublimity Therapeutics.
“This was the only deal over €10m+ in the second quarter. We can’t say for sure whether this is a temporary blip relating to timing of scaling companies funding demand but we did signal in the first quarter of this year that a number of large deals may have disguised a softening in the market. These figures bear that out,” commented Mr Hobbs.
The number of companies receiving funding in the first half of 2018 was 89 down over 30% from 141 in the same period last year.
The IVCA chairman added, “More worryingly we are continuing to see a dramatic decline in seed funding, down 37% since the first half of 2017. This will have repercussions on the supply of future growth companies.”
“At an uncertain economic time and high mobility of Foreign Direct Investment, it is more important than ever to support jobs in an indigenous tech sector, so these figures represent an alarm call,” added Sarah-Jane Larkin, director general, IVCA.
“There is a tightening in the supply of capital. Working in co-operation with Government we need to put new structures in place that can attract more private funding.”
She added that the 37% fall in seed funding to €15.7m in the first half of 2018 compared to €25m in the same period last year was cause for concern for entrepreneurs and start-ups.
For the first six months of 2018 life sciences accounted for 35% of total funding followed by software (31%).
Since the onset of the credit crunch in 2008, in excess of 1,400 Irish SMEs have raised venture capital of €4.8bn.
Sarah-Jane Larkin added, “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 €2bn 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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Note to editors – how the VenturePulse survey is compiled
The Irish Venture Capital Association VenturePulse survey is recognised as the definitive source of fundraising activity in Ireland by the VC industry and by government and international bodies including the OECD. The data covers equity funds raised by Irish SMEs and other SMEs headquartered on the island of Ireland from a wide variety of investors. This research is the result of detailed information supplied internally by members of the Irish Venture Capital Association and from published information where IVCA members were not involved.