Venture capital funding for Irish tech start-ups plummeted in the first quarter of the year, despite an overall increase of more than 50% in financial support for the tech sector as a whole.
Figures showed a “potentially worrying” fall in the value of deals below £10m, according to figures from the Irish Venture Capital Association’s Venture Pulse survey, with seed capital down by £30m. 50%.
Transactions worth a total of 380 million euros were announced in the first three months of 2022, an increase of 52% compared to the same period a year earlier.
The number of deals fell by almost a third, from 74 in 2021 to 50 in 2022, indicating that investors were participating in higher value deals.
The VenturePulse survey covers equity raised by Irish small and medium-sized businesses and SMEs headquartered on the island of Ireland.
Information is provided internally by members of the Irish Venture Capital Association and also includes information published elsewhere where IVCA members were not involved. .
Among the top deals in the first quarter were Irish unicorns: fintech Wayflyer’s €134m fundraise and food ordering platform Flipdish, which raised €94m.
Envirotech Exergyn raised 32.7 million euros. Other important agreements were concluded in life sciences, software and cybersecurity.
“All the growth comes from eight deals worth over €10m each, three of which are over €30m,” said Irish Venture Capital Association chairman Nicola McClafferty.
“While the momentum carried over from last year has continued for more established companies raising big rounds, some of that momentum appears to have stalled for early-stage companies.”
Transactions below €1m fell 31% to €8.9m, while those between €1m and €5m halved to €34.5m from at the same period of the previous year. It was a similar situation with transactions between 5 and 10 million euros, which totaled 11 million euros during the quarter, down 51% year-on-year.
Nearly 80% of funding in the first quarter came from international sources, raising concerns about the potential impact of macro factors.
“While this is to be welcomed and underscores the quality of Irish tech companies and their appeal to international investors, we have previously expressed concern about where any shortfalls would be made up if the global economy were to contract,” said Sarah-Jane Larkin, Executive Director. , IVCA.
She also welcomed the announcement of the government’s €90 million seed fund scheme in February aimed at start-ups, noting the nearly 40% drop in seed funding in the first quarter.
Global uncertainty is clouding the outlook somewhat.
“The venture capital industry around the world experienced a downturn in the first quarter due to an uncertain global economic outlook and the war in Ukraine,” McClafferty said.
“While challenging market conditions may persist, we also know that many great companies are being created and built during downturns, so we look forward to data for the next few quarters.”