Venture capital investment into start-ups fell by a third in 2020
– Overall investment in Irish SMEs grew by 13% to €925m
– Life sciences companies raise €332m, or over a third of total
Dublin; Sunday, 7th February 2021: Despite challenges caused by Covid-19, venture capital funding into Irish SMEs grew by 13% to €925m in 2020, compared to €820m the previous year, according to the Irish Venture Capital Association VenturePulse survey published today in association with William Fry.
However, deals under €5m, which represent start-ups and early stage indigenous companies, fell byalmost a third (32%) to €194m in 2020 from €285m the previous year.
Commenting on the findings, Gillian Buckley, chairperson, Irish Venture Capital Association said, “Despite the positive overall figures in a difficult year, the data highlights a concern that early stage companies are finding it increasingly difficult to raise funds.”
She said that the trend had accelerated in the fourth quarter of 2020 when deals under €5m fell by 50% to €41m compared to €82m in the same period the previous year.
“It is vital that we nurture the pipeline and indigenous stars of the future. We won’t have successful high growth firms raising €5m plus in three years if entrepreneurial companies are starved of early funding now.”
The overall growth in 2020 was accounted for by deals over €5m. Funding in the €5-10m range doubled to €204m in 2020 from €102m the previous year. In addition, deals above €10m were up by almost a third (31%) to €568m from €433m.
Sarah-Jane Larkin, director general, IVCA pointed to a significant softening in the market overall in the fourth quarter. Funding overall fell by 45% to €139m from €253m in 2019.
It was a good year for life sciences companies which raised €332m, or over a third (35%) of 2020 funding followed by software (29%).
“Life sciences has topped the funding league for the second time in three years and has grown from just 4% of the total in 2004,” commented Sarah-Jane Larkin. “This reflects Ireland’s growing reputation as a global centre of excellence in this sector.”
The balance of funding in 2020 was made up of fintech (12%); environmental (5%); agtech (3%) and other (16%).
There was an increase in the value of deals over €30m. Six firms in 2020 raised over €30m or a total of €353m compared to three firms in 2019 which raised €147m.
Reflecting the fall off in early stage funding, the overall number of rounds fell by 18% to 233 in 2020, from 285 in 2019.
Gillian Buckley, chairperson, Irish Venture Capital Association. Photo: Brad Anderson, Photo One.
Sarah-Jane Larkin, director general, Irish Venture Capital Association. Photo: Fennell Photography.
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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.
About the Irish Venture Capital Association
The Irish Venture Capital Association (www.ivca.ie) is the representative organisation for venture capital and private equity firms in Ireland.
DCU research finds that between 2003 and 2018 in excess of 2,500 Irish SMEs have raised venture capital and private equity of €5bn. Since 2016, 846 funding rounds have raised €2.85bn.
These funds were raised almost exclusively by Irish VC and PE fund managers who during this period supported the creation of over 25,000 jobs and attracted over €3bn of overseas capital into Ireland. 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.