Hopes that the Irish venture capital sector was turning a corner and bucking international trends have been dashed. Life sciences helped cushion the decline but international retreat weighs heavily on 2025 overall.
Venture capital investment in Irish technology SMEs fell last year for the first time since 2018, as weakening international appetite and political uncertainty contributed to a sharp slowdown, according to new figures from the Irish Venture Capital Association (IVCA).
The IVCA’s VenturePulse report, published in partnership with William Fry, shows that total funding dropped 23% to €1.1 billion in 2025.
“A major reason for the 46% decline in fourth quarter funding was the 71% fall off in international investment”
Activity slowed markedly toward the end of the year, with fourth quarter investment falling 46% to €291.4 million.
Rollercoaster year
Caroline Gaynor, chairperson of the IVCA, described 2025 as “a roller coaster year for Irish SMEs looking to raise capital”. She said that geopolitical concerns, particularly those linked to shifts in US trade policy, unsettled the market and contributed to the weakest second quarter in a decade.
She pointed to a significant drop in overseas capital as the key factor behind the late-year decline. International investment fell by 71% in the fourth quarter, from €470 million to €132.4 million. Gaynor noted that a mix of hesitancy among US venture firms, concerns about Europe and the impact of a weaker dollar had weighed on sentiment.
Despite the challenges, she said she remained optimistic about the fundraising environment in 2026.
She highlighted the Government’s Seed and Venture Capital Scheme, which has been allocated a record €250 million, and ongoing progress on the new enterprise scaling fund.
“Current geopolitical events have highlighted the need for us to be more self-reliant, have more access to local capital and not be dependent on overseas investors to fund our indigenous tech sectors,” she said.
Limited local capital pool
Sarah-Jane Larkin, director general of the IVCA, said the fourth quarter underscored a longstanding structural issue: Ireland’s limited pool of local private capital.
“A major reason for the 46% decline in fourth quarter funding was the 71% fall off in international investment,” she said.
Larkin added that US investors may be focusing their attention on domestic AI opportunities, where rapid dealmaking and fast-emerging unicorns are absorbing large volumes of capital. She said this shift was reflected in a 33% drop in large Irish deals over €30 million, which fell to €540.8 million for the year and declined by almost 70% in the final quarter alone.
Mid-sized transactions between €10 million and €30 million also slipped, falling 14% to €269.4 million. Smaller rounds proved more resilient. Funding in the €3 million to €5 million category rose 39% to €113.8 million, while deals between €1 million and €3 million edged down only 3% to €102.2 million. Seed funding declined 5% to €141 million.
The largest fourth quarter raises included quantum computing firm Equal 1 with €30 million, followed by Shorla Oncology with €25 million, biotech company Aerska with €17 million, smart kitchen platform Fresco with €15 million and healthcare technology business Luminate Medical with €14 million.
Life sciences dominated sectoral activity, attracting €461 million or 40% of total funding in 2025. Software companies secured €156 million, cybersecurity firms €136 million, AI and machine learning businesses €104 million and fintechs €96 million.
In total, 186 deals were completed during the year, down 14% from 217 in 2024.
Top image: Caroline Gaynor, chairperson of the IVCA, and Sarah-Jane Larkin, director general of the IVCA
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