While overall venture capital funding fell 20pc in Q3, there are signs of a recovery in seed funding and deals under €10m.

According to the latest figures from the Irish Venture Capital Association VenturePulse survey, published in association with William Fry, funding for the first nine months of 2019 rose slightly by 3.7pc to €566m from €546m this time last year.

“Major overseas venture capital investors are less attracted by deals below €10m which have characterised the Irish market this year”

“There has been a notable decline in larger deals, above €10m so far this year,” commented Neil McGowan, chairman, Irish Venture Capital Association.

“But these deals are lumpy by nature. Thanks to Government support, there has been a strong recovery in seed funding and deals below €10m which is very pleasing to see.”

McGowan referred to a 36pc increase in the number of companies achieving investment up to €10m. This rose from 139 in the first nine months of 2018 to 189 in 2019. This figure is also up 11pc for the quarter versus the same period last year.

Seed funding up 30pc

Seed funding in the third quarter is up 30pc on the same period last year. The number of companies which have raised seed funding this year to date is up 90pc.    

Sarah-Jane Larkin, director general, IVCA, highlighted a decline in the proportion of funding coming from overseas investors with a fall of 60pc for the quarter and 40pc in the year to date.

“This is again due to the decline in the number and amount of investment in larger funding rounds. Major overseas venture capital investors are less attracted by deals below €10m which have characterised the Irish market this year.”

She said that the reduction in overseas investment emphasised the need to introduce policy initiatives to unlock greater local private sector funding into domestic innovative companies, as happens in other European countries.

“While they remain an important player in the Irish market, as a nation we should not be overly dependent on overseas investors but create the environment locally to create Irish multinational companies.”

Software accounted for 34pc of funding in the third quarter. A surprising entry in the top three was food and drink at 26pc, partly due to a number of whiskey firms raising funds including West Cork Distillery (€15m), Nephin (€2.5m) and Chapel Gate (€1m). Life sciences accounted for 14pc.

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

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

Published: 5 December, 2019

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