Irish tech start-ups are facing challenges when it comes to raising funding, despite the overall investment landscape reaching new records. According to a survey conducted by the Irish Venture Capital Association, Irish tech companies managed to raise a staggering €963 million in funding from venture capital firms in the first half of this year. However, the figures were heavily influenced by a small number of big deals, leaving smaller firms struggling to secure amounts below €1 million.
While the overall funding figures experienced a 24% increase compared to the previous year, it is important to note that the numbers were somewhat skewed by these larger investment deals. Denise Sidhu, the Chairperson of the Irish Venture Capital Association, stated that if deals over €30 million were excluded, investment in the second quarter dropped by 52% compared to the previous year and by 16% for the first half of this year.
Despite the challenges faced by smaller start-ups, the survey highlights the impressive performance of Irish tech companies, outperforming global trends. The first half of this year saw a decline of over 50% in venture capital investment worldwide. Comparatively, Irish tech companies managed to raise more than €1 billion in 2021, reaching this milestone for the first time.
Some notable investment deals included almost €60 million secured by electric vehicle charging company Weev in the second quarter, as well as €65 million raised by artificial intelligence and machine learning company Everseen. Additionally, Jolt Energy was able to raise an impressive €150 million in the second quarter.
However, for start-ups seeking smaller amounts of funding, the situation is more challenging. The survey revealed that the value of deals under €1 million decreased by almost a third to €14.6 million, with a 33% decrease in the second quarter to €8 million. The number of deals also declined, with only 27 deals falling under the €1 million mark in the first six months of this year, marking a 55% decline compared to the previous year.
Despite these struggles, there were still positive indicators. Seed funding experienced a significant increase of over 80% to €44.9 million in the second quarter. The survey also highlighted the growing importance of artificial intelligence in the tech industry, with AI companies raising 9% of the total funding or €83 million in the first half of this year.
However, the survey also emphasized the high reliance on overseas investment, underscoring the need for local funding sources. The value of international investment rose from 58% of the total last year to over 80% in 2023. The Irish Venture Capital Association called on the government to change tax credit legislation to make it easier to invest in Irish start-ups. Additionally, they suggested investing some of the proposed sovereign wealth fund into domestic technology companies.
In conclusion, while Irish tech companies are experiencing success in terms of overall investment, the funding landscape remains challenging for smaller start-ups. The industry’s reliance on overseas investment also highlights the need for local funding sources. By addressing these areas, it is hoped that Irish tech start-ups will have improved access to funding opportunities, allowing them to thrive and contribute to the country’s growing tech sector.
