Life sciences dominates investment activity. While AI officially accounts for just 2% of sectoral activity, the technology is omnipresent across products and services.
Venture capital investment into Irish technology SMEs fell sharply in the opening months of 2026, with companies raising €221.7 million in the first quarter.
That’s according to the latest VenturePulse survey from the Irish Venture Capital Association in association with William Fry.
“This emphasises the appetite for quality Irish tech firms, despite unprecedented spending on AI in the US”
The total marks a decline of 58% compared with the same period last year, when funding exceeded half a billion euro in what had been a record start to the year.
Glass half full territory
Caroline Gaynor, chairperson of the IVCA, said the figures should be viewed in the context of that unusually strong comparative period.
“While funding fell across most deal sizes, the outcome must be seen in the context of an exceptionally strong start to last year, when Irish firms raised more than half a billion euro, which was a record for a first quarter,” she said.
International investors continued to play a dominant role in the market, accounting for 85% of the capital raised during the quarter.
Gaynor said this continued reliance on overseas funding highlighted both a structural dependency and an underlying strength in the Irish ecosystem.
“This is glass half full territory, as it once again highlights our exposure to overseas investment, but also emphasises the appetite for quality Irish tech firms, despite unprecedented spending on AI in the US,” she said.
The AI bubble grows, but how exposed are Irish firms?
Globally, artificial intelligence attracted a significant share of venture funding during the period, with Crunchbase estimating that AI accounted for around 80% of the $300 billion invested in start-ups worldwide in the first quarter.
In Ireland, however, life sciences emerged as the leading sector for venture investment, accounting for 54% of total funding, or €119.5 million. Fintech followed with 13%, representing €28 million, while software companies secured 12%, amounting to €26.9 million.
Artificial intelligence accounted for 2% of the total on a sector classification basis. Sarah-Jane Larkin, director-general of the IVCA, said that figure likely understates the role of AI across the market. She noted that many companies are categorised by their core industries even when AI technologies underpin their products and services.
Deal activity showed widespread declines across most funding bands during the quarter. Investment in transactions valued between €3 million and €5 million fell by 77% year on year to €7.9 million, down from €35 million. Deals in the €5 million to €10 million range also saw a significant contraction, dropping 62% to €16.5 million from €43.8 million in the same quarter last year.
The only area of relative resilience was in transactions below €1 million, where activity held up compared with other segments, suggesting continued momentum at the very early stage of the funding pipeline.
Market sentiment for the coming months remains uncertain, with geopolitical developments among the factors being closely watched by investors and founders. Ms Larkin said it was difficult to assess how the Iran war may influence near-term confidence levels.
“Ireland is a small market subject to global geopolitical headwinds,” she said. “But local policy initiatives may mitigate against this to the benefit of early stage Irish start-ups looking to raise funding this year.”
She pointed to recent changes in state support as a potential stabilising factor, including Enterprise Ireland’s decision to increase its direct investment limit from €250,000. In addition, the Government’s €250 million Seed and Venture Capital Scheme for the period from 2025 to 2029 is expected to begin supporting deal activity during the year.
The quarter’s largest transactions underline the continued strength of Ireland’s life sciences and deep tech ecosystem. Neurent Medical led the field with a €62.5 million raise in the medtech sector, followed by Aerska, which secured €33 million in biotech funding. Cybersecurity company Evervault raised €21 million, fintech firm Circit completed a €20 million round, and environmental business XFuel secured €18.5 million.
While overall volumes are lower, the composition of deals suggests that investors remain selective rather than absent, with capital continuing to flow into companies demonstrating strong technology propositions and global scalability.
Top image: IVCA director-general Sarah-Jane Larkin and IVCA chair Caroline Gaynor
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