Venture capital investment into Irish firms hit record levels in the first half of this year, even with a sharp slowdown between April and June.
Investment surged 21 per cent to €778.1 million in the six months to the end of June, according to new data from the Irish Venture Capital Association (IVCA) in association with William Fry. Most of that growth came in the first three months of the year, however. In the second quarter investment levels increased by only 2 per cent year-on-year.
“It was a strong first half overall for Irish tech companies raising funds, especially when one considers the geopolitical and economic headwinds and downturn in publicly quoted technology stocks over this time,” said Irish Venture Capital Association chairman Leo Hamill said in a statement. “It remains to be seen whether the significant slowdown in growth in the second quarter ... heralds a more difficult second half to the year,” he added.
The slowdown coincided with rising fears of an economic slowdown across the globe, with numerous private firms struggling to maintain their valuation on the private markets. Buy now, pay later service provider Klarna, once Europe’s most valuable fintech, has seen its valuation drop 85 per cent since June 2021, while payments firm Stripe is reported to have lowered its internal valuation by about 28 per cent.
The slowing in the second three months of the year was driven by a slump in funding from overseas investors, which dropped 50 per cent to €152 million.
“This over reliance on foreign investment threatens Ireland’s ability to continue to develop indigenous world class technology companies,” Hamill warned. “The tide of available global capital is starting to go out.”
Seed funding, which represents early stage first round investments, fell 7 per cent to €47.1 million in the first half, down from €50.5m in the same period last year, while the aggregate value of deals worth €10 million euros or less fell. In contrast, the aggregate value of deals worth €10 million and above increased sharply.
The biggest deals included TransferMate raising €66 million euros, while Trinity BioTech took in €45 million, according to IVCA data.
“Based on deal sizes, it’s quite hard to analyse what’s going on in the market until we see the results from the next two quarters,” IVCA director general Sarah-Jane Larkin said. “If the larger deals fail to come through in the second half, then we could start to see a downturn overall. But while large deals are important, it’s vital that early stage firms and those looking to raise under €5m can source funding.”