‘It’s been a rollercoaster year for Irish SMEs looking to raise capital,’ said Caroline Gaynor, chair of the IVCA.
For the first time since 2018, annual venture capital (VC) funding into Irish technology small and medium enterprises (SMEs) has fallen, according to the Irish Venture Capital Association (IVCA) Venture Pulse report.
The report, which was published today (8 February), in partnership with Irish law firm William Fry, indicated that funding in 2025 fell by 23pc to €1.1bn – a decline from 2024’s record €1.48bn. A total of 186 deals were completed in 2025, down from 217 in 2024 – representing a drop of 14pc.
Meanwhile, funding in the fourth quarter specifically fell by 46pc to €291.4m.
For Sarah-Jane Larkin, the director general of IVCA, the fourth quarter and IVCA’s research highlighted the weakness of not being able to tap into local private capital. “A major reason for the 46pc decline in fourth quarter funding was the 71pc fall off in international investment,” she said.
“Another reason for the decrease in international funding may be that US investors may be overly focused on local AI opportunities and certainly the amount of money being invested there is sucking up a lot of venture capital. Unicorn status is being achieved by early stage start-ups in generative AI in the US much quicker than in the past.”
The lack of overseas investment, according to Larkin, is reflected in the significant drop in deals valued at more than €30m, which saw a drop of more than 33pc compared to 2024 at €540.8m. In the fourth quarter specifically, this category fell by 69pc to €111m.
Funding in the €10m-30m range for the year overall also fell, dropping 14pc to €269.4m, while deals under €1m dropped by 26pc to €21.3m.
However, the IVCA indicated that transactions for other smaller rounds held up “reasonably well” in 2025, with funding in the €3m-5m category rising by 39pc to €113.8m. There was a small decline of 3pc in the €1-3m range to €102.2m, and seed funding dropped by 5pc to €141m.
The top five funding deals in quarter four were quantum computing company Equal 1 (€30m), Shorla Oncology (€25m), Aerska (€17m), Fresco (€15m) and Luminate Medical (€14m).
Life science companies attracted the most funding in 2025 in Ireland, raising 40pc of the total at €461m. This was followed by software at €156m, cybersecurity with €136m, AI and machine learning with €104m, and fintech with €96m.
Remaining positive
“It’s been a rollercoaster year for Irish SMEs looking to raise capital,” commented Caroline Gaynor, who is the chair of IVCA. She suggested that instability as a result of US president Donald Trump’s tariffs has, in part, led to the worst second quarter on record seen in the last 10 years.
“In addition, the fourth quarter saw a 71pc retreat from the Irish market by international investors from €470m to €132.4m. This may be due to hesitation and uncertainty by US VC firms due to a number of factors including an ‘America first’ focus, negativity from across the Atlantic about Europe and the impact of a weakening dollar.”
However, Gaynor said she remained positive about Irish entrepreneurs looking to raise capital in 2026. She explained that the Irish Government’s Seed and Venture Capital Scheme 2025 has a record allocation of €250m and the benefits of the scheme should be coming into effect shortly.
“Progress is being made on the Government’s important Enterprise Scaling Fund 2, as well as other policy measures to mobilise capital to Irish SMEs. Current geopolitical events have highlighted the need for us to be more self-reliant, have more access to local capital and not be dependent on overseas investors to fund our indigenous tech sectors.”
With additional reporting by Colin Ryan
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