Irish tech funding is set to exceed €1bn this year after new figures show that venture capital here has surged during the Covid era lockdown.
he unexpected jump — amounting to €363m between April and June, according to the Irish Venture Capital Association (IVCA) – coincides with international markets boosting tech companies to unprecedented value levels.
While other business sectors struggle, Irish tech companies are increasingly seeing cash investors ready to sign funding deals of over €10m.
The number of deals involving over €30m of funding has doubled, with a 68pc increase in deals involving amounts between €10m and 30m. Deals of between €5m to €10m rose by 40pc. The only deal size to fall were of those less than €5m which are down 7pc.
For the half year, the IVCA figures, prepared in association with William Fry, reported that venture capital and private equity investment rose by 38pc from €430m to €593m.
However, industry executives are warning that this may come at the expense first-time startup deals, where investment rounds have fallen.
According to the IVCA figures, first-time funding during the second quarter fell by almost 60pc with only a handful of start-ups raising their first equity rounds.
The figures also show that of the €340m raised, €138m was accounted for by just two deals — fintech firm Fenergo (€73m) and the health testing firm Let’s Get Checked (€65m).
The next biggest deals during the quarter were Cork-based Keelvar (€18m), Dun Laoghaire-based Profitero (€18m), Avectas (€17m), Evervault (€13.5m) and Cloudsphere (€12.8m).
Seven other deals attracted between €5m and €10m in funding during the three-month period.
Atlantic Bridge was the most active Irish venture capital firm by number of deals, participating in six funding rounds that combined to raise €37m.
The early-stage funding firm Frontline was the next most active, participating in five deals that raised €24.2m, while Dublin-based ACT was involved in four deals worth €18.4m.
Delta Partners participated in three deals worth an accumulated €3.8m with Barry Downes’ Sure Valley Ventures (€7.1m) and Dublin-based Tribal VC (€9m) each closing one deal during the three-month period.
Almost all of the VC funding deals in the quarter involved multiple backers.
“The fact that we recorded a record quarter in this period seems counter-intuitive but may be explained by VCs looking to assist client companies overcome the threats caused by the pandemic and upping their investment in this quarter to help them through the next 12-24 months,” said Gillian Buckley, chairperson of the IVCA.
“The fall in first-time funding rounds is a major concern but understandable as VCs focused on backing existing portfolios rather than seeking out new investments.”
Others say that the fall in early funding should be acknowledge as a potential threat to Irish industry.
“This will have an impact on future investment levels, particularly as the Covid-19 pandemic continues to disrupt the economy,” said Sarah-Jane Larkin, director general of the IVCA.
“The collapse in first round funding highlights the need to encourage more investment in start-ups. In our pre-Budget submission we will be recommending how to enable an innovation driven economic recovery by attracting new private investors in start-ups through increased tax relief for high risk, early stage firms.”
A third of VC funding in the second quarter went to life science companies. This was followed by software (27pc) and fintech (21pc).
The IVCA data collected covers equity funds raised by Irish SMEs and other SMEs headquartered on the island of Ireland from a variety of investors.