Venture capital funding for Irish SMEs rose almost 20% in Q3 to €231m

Venture capital funding for Irish small and medium sized enterprises rose almost 20 per cent in the third quarter of the year, reaching €231 million, new data from the Irish Venture Capital Association (IVCA) showed.

The VenturePulse survey showed a total of €872 million was invested in the first nine months of the year, compared with €786 million a year earlier.

The third-quarter figures showed a marked increase in funding for companies compared with 2020, when €193 million was invested, with a recovery in funding for start-ups.

Seed funding rose 63 per cent to €31 million, the survey showed.

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“In the early stages of the pandemic, many venture capital companies looked to back their existing investments and well-established companies. Having managed that, there is a renewed appetite to focus on opportunities in early stage companies,” said Nicola McClafferty, chairwoman of the IVCA.

There was a marked increase in deals under €5 million, with an 89 per cent increase to €76 million from €40 million. The data showed the majority were under €3 million.

While deals in the €10 million plus category tripled to €71 million, those in the €5-€10 million range showed little change from last year at €70 million.

There were no deals in the €30 million plus range, meaning the quarter was unaffected by an outlier mega deal.

Sarah-Jane Larkin, director general of the IVCA , said the Government’s Budget 2021 changes to the Employment Investment Incentive Scheme (EIIS) was fuelling a positive outlook for start-ups.

“In addition, the planned €90 million innovation fund, due to be launched early next year and focused entirely on early stage enterprises, should have a really positive impact on new and emerging companies,” she said. “One consequence of the pandemic is increased interest in entrepreneurs and tech firms which have ideas relating to health as well as the digital economy.”

Life sciences accounted for 38 per cent or €329 million of total funds raised, followed by software at 24 per cent and fintech at 11 per cent. Environmental industries accounted for 12 per cent of the total in the third quarter.