IVCA warns of over-reliance on FDI as VC funding up 1pc in Q3

Life sciences leads the way in funding rounds this quarter, with envirotech and AI start-ups also doing well.

Venture capital funding of Irish tech small and medium sized enterprises (SMEs) was up just 1pc on the same period last year, according to a new survey.

Released today (17 November), figures from the Irish Venture Capital Association (IVCA) Venture Pulse survey, which was published in association with William Fry, showed that VC funding into SMEs was €192.5m in Q3 of this year, just 1pc ahead of the same period last year.

This compares to a global trend where VC funding in Q3 fell by 15pc year over year.

In total, VC funding in Ireland for the first nine months of the year fell by 18pc to €945.3m, down from €1.1bn in 2023. Globally, VC funding fell by 3.7pc in the same period.

Medtech led the way with many of the largest deals in Q3, including Neurent Medical (€18.2m), Luminate Medical (€13.9m) and Loci Orthopaedics (€13.8m). The other big deals were renewable energy business Circal (€15m) and electric vehicle and solar installation provider ePower (€15m).

The number of Q3 deals rose by 55pc to 59. While there were no deals above €30m, there was an increase in deals under €10m.

Deals in the €3m-€5m range rose by 52pc to €29m, €1m-€3m rounds grew by 16pc to €26m and deals under €1m rose by nearly a third to €9m.

“These underlying trends reflect a buoyant ecosystem in Ireland for early-stage companies, many of which are involved in cutting edge technologies such as artificial intelligence (AI), cybersecurity, quantum computing, medtech and envirotech,” said chair of the IVCA, Gerry Maguire, who took over from Denise Sidhu earlier this year.

Trump could disrupt funding landscape

Life sciences was the successful sector for raises in the nine months to September, raising 42pc of the total at €392.8m. This was followed by envirotech (13pc), regtech (10pc), fintech and software (both 9pc).

In Q3, life sciences raised 50pc of the funding, with envirotech raising 16pc and AI and machine learning raising 11pc.

International funding for Q3 made up 44pc of the total raised. Maguire warned of the need for increased indigenous support for Irish companies in response to the recent election of Donald Trump as president of the US.

“The potential for an isolationist leaning incoming administration in the White House … [means we need] to take these indigenous companies to the next level and grow our own tech champions rather than rely on less committed overseas investment.”

Director general of the IVCA, Sarah-Jane Larkin warned of a “severe shortage” of private capital in Ireland such as pension funds, family offices and corporates, to match public capital from the likes of Enterprise Ireland and the European Investment Fund.

“Government policy can have a significant impact in fixing this, as is happening in the UK, and in several EU countries such as Denmark and France,” Larkin said.

In last quarter’s report, the IVCA also warned of the dangers of Ireland’s dependence on foreign investment to scale start-ups.

Don’t miss out on the knowledge you need to succeed. Sign up for the Daily Brief, Silicon Republic’s digest of need-to-know sci-tech news.