Irish tech companies lure record €392m venture capital funding

Irish tech companies lured almost €400 million in venture capital backing during a record three months to the end of June, the latest figures show.

Medical science, software and other technology businesses attracted funding from mainly US sources, according to a report published on Sunday by the Irish Venture Capital Association (ICVA).

The Venturepulse survey shows that tech businesses attracted investment totalling €392 million during the second quarter, a record for the period and a 7.6 per cent increase on the same three months in 2020.

The survey, published in association with lawyers William Fry, states that venture capital investment for the first six months of 2021 rose 8 per cent to €641 million, from €593 million during opening half of last year.

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Nicola McClafferty, ICVA chairwoman said international funding, mostly from the US, accounted for 70 per cent of the total in the first half, a 55 per cent increase on 2020. “This is a strong endorsement of the high quality of Irish tech companies and reflects a global interest in them.”

However, Ms McClafferty cautioned that Irish businesses may not be able to repeat the performance as international investment was cyclical.

“We should be looking now to increase the supply of funding from domestic non-traditional venture capital investors such as pension funds, private investors and corporates as is happening across the UK and other European countries.”

Ms McClafferty urged the Government to establish a working group to advise on how best to achieve this, a step she argued could be taken at no cost to the taxpayer.

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Sarah-Jane Larkin, ICVA director general, said start-up and early-stage companies suffered a 47 per cent fall in the value of deals in the €1 million to €5 million range to €21.6 million in the second quarter, when the actual number of those transactions fell 42 per cent.

“We hope this was just a temporary blip as the half year performed well with an increase of 15 per cent in the €1 million to €5 million to €91.9 million and a rise of 19 per cent in the number of deals from 37 to 44.”

Deals of less than €1 million, mostly involving earlier-stage companies, grew by a fifth to €26.2 million, while the number of those agreements rose 16 per cent to 64. Deals of more than €10 million increased 4 per cent to €116 million.

Reflecting a European trend, there were significant increases in larger investments in the second quarter. Investments of more than €30 million rose 34 per cent to €185 million as a consequence of diagnostics outfit Lets Get Checked raising €123 million and financial technology business Wayflyer raising €62 million.

Life science companies secured 43 per cent of the money invested during the first half of 2021. Software attracted one fifth, financial technology 12 per cent, while companies founded on a scientific discovery got 4 per cent.