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The Irish venture capital landscape experienced a notable downturn in the third quarter, marked by a sharp drop in the value of deals and a significant decrease in the number of transactions.
FREMONT, CA: A significant decrease in the value of venture capital (VC) deals was observed in Ireland in the third quarter, dropping by 38 per cent from the same period last year. The number of transactions also experienced a decline of over a quarter, with the exception of deals under 1m euros. This downturn contrasts sharply with the first-half report, which revealed a record of 963m euros in VC investment, reflecting a 24 per cent increase over the previous year.
The downturn is being attributed to a number of factors, including the global economic slowdown, rising interest rates, and the war in Ukraine. These factors have made investors more cautious and less willing to take risks on early-stage companies.
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Despite surpassing the one bn euro threshold in 2021 for the first time in a full year, Ireland is on the cusp of reaching that mark for the half year in 2023. However, the situation is totally different, stating that the 1bn euro threshold was crossed. Overall funding for the first nine months of 2023 held up with a 6 per cent increase to just over 1bn euros compared to the same period last year. The report raises concerns about the third quarter as the value of deals, except those under 1m euros, fell significantly.
Notably, deals in the 3 to 5m euros range declined by over a third, and those in the 5-10m euros range dropped by over three-quarters. Major VC funding deals in the third quarter included Ocuco, a software start-up that raised 60m euros; life sciences start-up Shorla Oncology, which secured 32m euros; solar start-up UrbanVolt with 26m euros, and medical start-up ProVerum, which raised 15m euros.
The report also highlighted a worrisome indicator: the value of international VC investment fell by over two-thirds in the third quarter. It emphasised the need for Ireland to develop local private funding sources to reduce global dependence. Sectors successfully raised funding this year include clean energy, which secured half of total VC funding, followed by life sciences, software, AI and machine learning, and fintech.
The importance of funding leaders in generative AI, medtech, fintech, cybersecurity, and other deep-tech innovations to shape Ireland's economic future. Ireland risks having its economic future dictated by interests outside the country without adequate funding.
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