Funding remains biggest challenge for Irish founders

Start-ups and scale-ups in Ireland run gauntlet of an uncertain global economy, the explosion in AI, as well as funding and staffing challenges.

Accessing funding remains the biggest challenge for Irish tech entrepreneurs for the fourth consecutive year, with 80% of founders describing capital attraction as “difficult” or “very difficult.”

That’s according to Scale Ireland’s 2025 State of Start-ups Survey released today (8 May 2025).

The comprehensive survey, which gathered insights from 235 founders and CEOs of tech start-ups and scaling companies across Ireland, reveals a sector navigating significant challenges while eagerly adopting artificial intelligence technologies.

AI adoption is surging within the Irish start-up ecosystem, with nearly 88% of founders either deploying or preparing to implement AI solutions in their businesses. While most respondents (87.3%) anticipate positive outcomes from AI integration, there appears to be an information gap regarding new regulations. Despite 59.1% of founders being aware of the EU AI Act, nearly 44% remain uncertain about how these regulations will impact their operations.

Keeping Irish talent in Ireland

The recruitment and retention of staff presents another significant hurdle. More than half of founders report staff retention difficulties comparable to the previous year, with 17% experiencing even greater challenges. Approximately one-third of companies lost staff over the past 12 months. Nearly two-thirds (64.7%) of start-up leaders believe Ireland needs to do more to help indigenous tech firms attract and retain talent.

International talent continues to play a crucial role in the sector’s development, with over half of respondents rating the contribution of non-EU workers as “very significant” and another 35% describing it as “significant.” Almost half (48.5%) of the surveyed companies employ workers from outside the EU.

The survey also highlights ongoing frustration with state support mechanisms. Only 10% of founders utilise the KEEP share options scheme for staff recruitment and retention, while 57.9% do not avail of the R&D tax credit. Additionally, 37.4% found the EIIS process difficult or very difficult to navigate.

In terms of diversity and sustainability, there are positive developments. Nearly 60% of companies now have a female founder in their leadership team, up from 50.9% in 2024. Meanwhile, 48.5% of companies contribute to local or global sustainability goals, and 41.3% have implemented sustainability plans, an increase from 33.3% last year.

Martina Fitzgerald, CEO of Scale Ireland, emphasised the critical importance of addressing funding challenges.

“At this time of uncertainty globally, our findings reinforce the need to bolster our indigenous sector. Funding is without doubt the No.1 issue for start-ups. It is vital that we mobilise private capital to ensure Irish companies can scale globally and remain here in Ireland. We do not want to see some of our best tech companies leaving Ireland.”

Brian Caulfield, chair of Scale Ireland, added: “The survey demonstrates the challenging investment landscape facing start-up and scaling companies and the need to attract more private investment.

“We need to significantly support greater levels of angel and VC investment, revenue growth capital and IPOs. We also need to unlock pension fund savings into indigenous companies. Even a small change would have a significant impact.”

Main image at top: Martina Fitzgerald, CEO, Scale Ireland

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