News Release
IVCA reports year of mixed fortunes in 2023 VenturePulse survey
– Venture capital funds raised by Irish SMEs hit record €1.35bn but fall 16% in final quarter
– Data shows marked decrease in second half
Dublin, Sunday 25th February, 2024: 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 today 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 €963m of investment, however the second half saw a marked decrease with only €394m. 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.
She said that the data illustrates mixed fortunes for companies at different stages. “It was a positive year and last quarter for start-ups looking to raise less than €5m, but it was far more challenging for firms seeking larger amounts.”
She pointed out that deals in the €5-€10m range fell by over a quarter (26%) to €105.5m in 2023 from €142m the previous year. This trend accelerated in the fourth quarter with deals in this range falling by 100% to €31.8m from €64.6m, compared to the same quarter in 2022.
It was a similar story in the €10-€30m category with funding falling by nearly a half (47%) to €208m in 2023 from €396m the previous year. Funding for quarter four also fell by almost a half (49%) to €30m from €59m in the same quarter in 2022.
Denise Sidhu commented: “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.”
She added: “We warmly welcome Minister Coveney’s move to publish the report of the Finance for Scaling Working Group, which includes actionable recommendations to support high potential firms to access scaling finance.”
Sarah-Jane Larkin, director general, IVCA, commented: “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. €745m, or 55% of the total €1.35bn, was into eight companies.”
She said that the sector breakdown for the year reflected Irish innovative tech companies participating in new technologies. Envirotech raised €612m or 45% of total funds raised in 2023, followed by life sciences at €224.5m (17%) and software at €110m (8%).
“Artificial intelligence (AI) and machine learning represented 7% or €97.8m of the total in 2023, almost at the same level of software, one of the traditional leaders in Irish funding.”
Top five deals in quarter four 2023 were EasyGo (envirotech) €30m; LUMA Vision (life sciences) €20m; Cloudsmith (software) €10m; Alvarius (life sciences) €5.5m and OOHPod (business services) €5.4m.
Ends
1 Source: Global Startup Funding In 2023 Clocks In At Lowest Level In 5 Years (crunchbase.com)
Press queries to:
Sarah-Jane Larkin, director general, IVCA, Email: sjlarkin@ivca.ie
Mob: 087 320 9209 or
Ronnie Simpson, Simpson Consulting, Email: ronnie@simpsonconsulting.ie
Mob: 086 855 9410
Note to editors – how the VenturePulse survey is compiled
The Irish Venture Capital Association VenturePulse survey is recognised by the VC industry and by government and international bodies, including the OECD, as the definitive and most up to date source of fundraising activity in Ireland. 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 the latest detailed information supplied internally by members of the Irish Venture Capital Association and from published information where IVCA members were not involved. A list of the funding rounds that comprise the source data for the total will be available on the IVCA website.
About the Irish Venture Capital Association
The Irish Venture Capital Association is the representative organisation for venture capital and private equity firms in Ireland.
An independent DCU report released in January 2020 found that Irish venture capital and private equity firms have invested €5bn in Irish SMEs since 2003 and, through syndication, have attracted in a further €3bn in funding from international firms.
This supported the state’s investment through its agencies’ Enterprise Ireland and the Irish Strategic Investment Fund and geared up investment through the Seed & Venture Capital Programme by almost 16 times.
The study found that employment numbers in venture and private equity backed firms increased by an average of 27% per annum since 2016, compared to an overall increase in employment in the economy of 3.3% per annum over the same time period.