Irish venture capital funding fell 5pc to €430m in the first half (H1) of 2019, according to new figures issued by the Irish Venture Capital Association as part of its VenturePulse survey in association with William Fry.

However, there were signs of a recovery in the second quarter with funding up over 90oc to €233m.

“While funding in the first half was down, it rebounded strongly in the second quarter compared to last year,” commented Neil McGowan, chair, Irish Venture Capital Association.

“In the light of so many international economic uncertainties it is vital to grow and encourage our indigenous base in an environment where we are probably over-reliant on foreign direct investment”

“However, it should be noted that investment in the second quarter of last year was particularly low. With Government policy input we hope the recovery can continue,” McGowan said.

McGowan’s comments are interesting as Budget 2020 is approaching and once again entrepreneurs are beating the drum for important reforms such as an overhaul of current Capital Gains Tax rules as well as making the existing EIIS (Employment Incentive and Investment Scheme) is fit-for-purpose and more competitive compared with the UK’s version.

Empowering Irish SMEs

“In the light of so many international economic uncertainties it is vital to grow and encourage our indigenous base in an environment where we are probably over-reliant on foreign direct investment,” said Sarah-Jane Larkin, director-general of the Irish Venture Capital Association.

“This dependence is reflected in the fact that multinational companies contributed 77pc to last year’s corporation tax take.”

For the first six months of 2019 software accounted for 45pc of total funding followed by life sciences at 25pc. Fintech investments reached almost 10pc of the total for the first time.

Larkin added that the positive underlying trend is reflected in the fact that the number of companies raising funds increased by almost 50pc from 93 in the first half of 2018 to 139 to June this year.

She explained that vital seed funding to early stage companies rebounded strongly, more than doubling to €38m in the first half of 2019 from €16m in the same period last year.

Larkin said that since the onset of the credit crunch in 2008, in excess of 2,500 Irish SMEs have raised venture capital and private equity of €5bn.

These funds were raised almost exclusively by Irish VC and PE fund managers who during this period supported the creation of up to 20,000 jobs and attracted over €2.5bn of capital into Ireland. This supported the state’s investment through its agencies’ Enterprise Ireland and the Irish Strategic Investment Fund and geared up investment through the Seed & Venture Capital Programme by almost 16 times.

Pictured above: Sarah-Jane Larkin, director general and Neil McGowan, chair, Irish Venture Capital Association. Image: Fennell Photography

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

Published: 12 September, 2019

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