Irish venture investment in SMEs grew 11pc to €820m

Impact of Enterprise Ireland’s new €175m seed scheme is starting to be felt in the Irish market, according to venture capital firms.

Venture capital funding into Irish SMEs grew by 11pc to €820m in 2019, compared to €740m the previous year, according to the Irish Venture Capital Association VenturePulse survey published today in association with William Fry. Technology companies raised 87pc of funding last year.

The annual growth was stimulated by a record fourth quarter where funding grew 120pc to €253m from €115m in the same period last year.

“These amounts are typically raised by scaling companies who are at a critical stage in terms of expansion in employment and revenues”

“While 2019 was below the peak of €994m in 2017, a small number of large deals can have a significant impact – overall it is encouraging to see growth over last year,” commented Neil McGowan, chair, Irish Venture Capital Association (IVCA). “We hope that the impressive fourth quarter results suggest that continued momentum.”

Man speaking at podium.

Neil McGowan, chair, Irish Venture Capital Association.

McGowan said that the growth had extended into seed or early stage companies where funding was up 55pc to €76m in 2019 compared to €49m in the previous year.

“The impact of Enterprise Ireland’s new €175m Seed & Venture Capital Scheme (2019-2024) is starting to be felt in the Irish marketplace which is to be welcomed.”

Major rise in value of deals between €5m and €10m

Woman speaking at podium.

Sarah-Jane Larkin, director-general, Irish Venture Capital Association.

Sarah-Jane Larkin, director general, IVCA, said that there had been growth across all deal sizes during the year and an increased prevalence of private equity but of particular interest was the rise of 175pc in the value of deals between €5m and 10m.

She explained that funding in the €5m to 10m category grew to €102m in 2019 from €37m the previous year. The number of companies availing of this level of funding grew to 16 in 2019 from five the previous year. 

“This is important as these amounts are typically raised by scaling companies who are at a critical stage in terms of expansion in employment and revenues,” said Sarah-Jane Larkin.

“At a time when a programme for Government is being considered, it is important that policy makers recognise the need to help create the right environment for local entrepreneurs to build a knowledge based indigenous Irish economy.”

She referred to a recent DCU report which found that employment in venture capital and private equity backed firms increased by an average of 27pc per annum over a three-year period from 2016. This compares to an overall increase in employment in the economy of 3.3pc per annum over the same time frame.

Software companies raised 39pc of funds in 2019 followed by life sciences at 20pc of the total.

There were also strong contributions from the fintech and cybersecurity sectors.

Written by John Kennedy (john.kennedy3@boi.com)

Published: 5 March, 2020