Start-ups who are in the process of raising funds shouldn’t spend too much time haggling over terms but should try to close as soon as possible given the current economic climate, a leading Irish tech veteran investor has warned.
Brian Caulfield, who previously co-founded Exceptis Technologies and Similarity Systems, said the coronavirus outbreak "has remade the funding landscape".
Mr Caulfield, who recently established the lobby group Scale Ireland and who also remains a partner at Dublin- and London-listed venture capital firm Draper Esprit, said venture capital firms will be slowing their pace dramatically as they consider how a coronavirus-inspired slowdown will impact on the market. The tech veteran added that angel capital is also less likely to be available to start-ups in the near term.
His comments are included in TechIreland’s 2019 funding review, which has just been released. The review shows that overall funding in the State fell by 25 per cent last year to €707 million.
Mr Caulfield said VC's own investors will be concerned about liquidity in their own portfolios right now and will likely push firms to further slow down the pace of investment. He added that while State agencies such as Enterprise Ireland will likely continue to back start-ups, the requirement they have that companies secure matching private capital will mean funding difficulties.
The TechIreland review shows that companies in the healthtech sector secured the most funding last year with 55 deals raising a combined €182 million. Fintechs were second placed with 27 deals securing €149 million. Enterprise tech, consumer/ecommerce and telecomtech round out the top five sectors for funding.
Overall, some €707 million was raised by 243 companies last year, as against €950 million for 223 companies in 2018.