Cash for Irish startups falls as global funding freeze bites

Deals in the €5m to €10m range were especially badly hit, falling over 50pc to €32m in the last quarter compared to €65m for the same quarter in 2022.

Deals between €10m and €30m were almost as badly hit, falling by nearly half for the quarter (€30m) and for the year (€208m) compared to the same periods a year previously.

It dampened what had been a strong overall year for tech funding in Ireland, with €1.35bn raised over the entire 12 months. This was the most ever recorded by the IVCA, up 2pc on the year before.

However, the last six months have shown a sharp falloff in venture funding for tech startups in Ireland and globally.

“The first half of 2023 looked extremely strong with €963m of investment,” said Denise Sidhu, chairperson of the IVCA.

“However the second half saw a marked decrease with only €394m. This is not totally surprising in a year where VC funding globally fell by 38pc in 2023 and by 25pc in the final quarter compared to same period in 2022.”

The top five deals in the fourth quarter of 2023 were the EV charger firm EasyGo (€30m), the life-sciences firm Luma Vision (€20m), software firm Cloudsmith (€10m), Alvarius (€5.5m) and the parcel delivery firm OOHPod (€5.4m).

She said that deals in the €5m to €10m range fell by over a quarter (26pc) to €105.5m in 2023 from €142m the previous year.

“This data highlights the risk of these highly innovative indigenous firms hitting a brick wall just at a critical time in their growth trajectory due to the lack of locally sourced scaling finance.”

One bright spot was deals worth under €5m, which rose in the last quarter of 2023 compared to the previous year.

Funding in the €3m to €5m range increased by over a third (36pc) to €40m in the final quarter compared to the same period in 2022, while deals in the €1m ro €3m category grew 170pc to €63.7m. Deals below €1m grew by 8pc to €8.6m, while seed funding also performed well, increasing by 58pc to €63.6m.

“Ireland Inc has become over reliant on critical but transitory scaling finance provided by international backers,” said Sarah-Jane Larkin, director general of the IVCA.

“International funding into Irish tech SMEs amounted to two thirds of the total for 2023. €745m, or 55pc of the total €1.35bn, was into eight companies.”

Envirotech raised €612m, or 45pc of the total funds raised in 2023, followed by life sciences at €224.5m (17pc) and software at €110m (8pc).

Artificial intelligence and machine learning represented 7pc of the total raised in 2023.

The IVCA’s VenturePulse report is published in association with William Fry.