Irish tech firms raise a record €1.6bn

Funding raised in 2021 was up 60% on previous year, according to the latest TechIreland Funding Review.

Irish tech funding in 2021 reached a new high of €1.6bn with a record number of 292 companies raising investments.

That’s according to the latest TechIreland Funding Review 2022 Edition, sponsored by Bank of Ireland and supported by the Irish Venture Capital Association.

“2021 was a landmark year for Irish tech with records broken across all sectors and stages of growth”

Irish tech funding in 2021 reached a new high of €1.6 billion with a record number of 292 companies raising investments.

A landmark year

“2021 was a landmark year for Irish tech with records broken across all sectors and stages of growth,” said John O’Dea, TechIreland’s chief executive. “At a time of rising international tension, it is great to be the bearer of good news.”

Despite the pandemic, 12 companies each raised over €30m last year – compared to 2019 when just 3 companies raised over €30m. 118 companies raised early stage rounds, back to pre-Covid levels. 46 companies raised between €5 and €30m, a new record.

These results underline the strength and innovation capability of Irish tech companies, despite the challenges posed by the pandemic.

“Perhaps surprisingly, as a global pandemic raged, 2021 represented one of the most positive years for funding Irish tech,” said Brian Caulfield, chair of Scale Ireland. “Not only did the overall total amount raised increase by over 50% to a record €1.6B but the number of companies funded also grew by 11%. Investor confidence has clearly rebounded from the initial shock of the pandemic.

But the funding picture is still characterised by a noticeable gap between high-level investments and a dearth in early-stage and seed investment which is hopefully going to be addressed by new funds revealed in the past week and led by Delta Partners (€70m), Elkstone (€100m) and Melior (€160m), and all underpinned by the Government’s €90m investment in seed capital revealed in February.

The top 10 largest investments accounted for half of the overall funding raised. Mainstay Medical raised €131m, followed by Let’s Get Checked (€123m) and GH Research (€105m). Dublin companies occupy the top 10 largest investments. Cork’s Teamwork (€59m) is the only non-Dublin company in the top 10.

Even seed funding, which has consistently been problematic in recent years, grew. The number of  companies raising rounds up to €1m was up over 10% in 2020.

“It is heartening to see a record €1.6bn being raised last year and the number of companies that secured funding growing by 11%, despite the challenges of the global pandemic,” said Paul Swift, head of Technology, Media and Telecoms Sector at Bank of Ireland.

“It was also good to see that the early stage, seed funding environment improved after a few difficult years. New pools of funding like the Irish Innovation Seed Fund and the Bank of Ireland-backed Delta fund will provide a level of certainty in terms of potential access to capital for the pipeline of Irish high-growth tech companies.”

As usual, Enterprise Ireland led the charge at the early-stage and the launch of the new €90m Irish Innovation Seed Fund by the Government is expected to provide greater support in 2022. It is estimated that this will result in an additional €200m being available over the coming years.

“The increase in investment last year across the board has shown that while the pandemic interrupted the normal start-up cycle for everyone; the fundamentals of investment still hold and, as in previous years, good projects will always attract interest from investors,” said Donnchadh Cullinan of Enterprise Ireland.

Angel funding continues to grow. Halo Business Angel Network (HBAN), the Irish angel network, had its best year to date, closing 71 deals across the island, with angels investing €18.2m as part of rounds worth €118m.

“2021 was HBAN’s strongest year to date,” said John Phelan, all-island director of HBAN. “Angels invested €18.2m into 71 deals across the island. Overall HBAN investors have now invested over €140m private capital into 650 deals.”

Companies are also tapping diverse sources such as crowdfunding, European Innovation Council, and bank loans, however Venture Capital remains the dominant source, accounting for more than 95% of the total funds raised.

Funding by sector

Like previous years, heathtech sector attracted the most funding as 74 companies raised a total €623m, more than 50% up on the previous year.

Enterprise Solutions was the largest sector in terms of the number of companies, with 84 companies raising €363m. FinTech stood third with 29 companies raising €265m, up from €186m in 2020.

Perhaps as a result of Covid, E-commerce saw a sharp increase in funding as 36 companies raised €100m in 2021, up from 14 companies that raised €33M in 2020. Cleantech saw a dismal performance despite the global headlines on climate action and sustainability as only seven cleantech companies raised a combined €12m, down from €173m into 10 companies in 2020. Travel, education, telecom and mediatech were also out of favour last year.

Software-as-a-Service (SaaS) businesses set a new record as 44 SaaS companies raised a record €315m in 2021, up from the previous year’s record of €202m into 39 companies. The focus was also on Future-tech. A record 38 artificial intelligence companies raised a total €171m, up from €121m into 32 companies in 2020. 

“Changes in consumer banking, spending habits and increased digitalisation among traditional financial institutions present a major opportunity for Irish fintechs to build on the growth they have recently experienced,” explained Redmond O’Leary of InterSystems.

Regional picture

From a regional perspective, Dublin dominated as always, taking over 75% of the total funding.

The East region saw €1.2bn invested into about 180 companies. Companies based outside Dublin raised a total €400m. 33 companies from the West region (Galway, Mayo, Roscommon and Donegal) raised a more than €130m.

30 companies from the Southeast (Cork, Waterford, Wexford and Tipperary) raised close to €100m. Four companies from counties Limerick and Kerry raised more than €25m.

27 Northern Ireland-based companies raised a total €83m, significantly higher than the €26m raised in 2020.

2021 also saw a milestone in female founder funding as 55 companies led by women raised €230m, up 120% on 2020. Nevertheless, that’s only 13% of the total.

“We still need to support women-led businesses,” urged O’Dea.

It is also clear that early stage investment needs to be doubled down upon in the years ahead.

“It’s vital that the new Irish Innovation Seed Fund, is up and running as soon as possible,” said Martina Fitzgerald, CEO of Scale Ireland. “We are also seeking changes to incentivise more private investment into early stage start-ups, including the introduction of loss relief on EIIS investments.”

Peter Coppinger of Cork-based Teamwork added: “The global pandemic has hampered investment in early-stage start-ups in favor of more established, later-stage companies, but as you can see from this report, there are many paths to growth and to achieving scale.”

The full report will be on the TechIreland website 

John Kennedy
Award-winning editor John Kennedy is one of Ireland's most experienced business and technology journalists.