Business Irish

Monday 16 July 2018

Incoming venture capital chief warns of funding 'crunch' for Irish startups

Brian Caulfield, head of Irish Venture Capital Association.
Brian Caulfield, head of Irish Venture Capital Association.
Adrian Weckler

Adrian Weckler

Irish tech startups are facing a financial crunch that is pushing some companies to set up operations in the UK to benefit from its more benign funding regime, according to the new chairman of the Irish Venture Capital Association.

Brian Caulfield has warned that Irish tech startups are facing a "tough" period ahead for financing due to cyclical issues with Irish venture funds' own fundraising schedule.

"In the short term in Ireland it's going to be pretty tough for startups and companies to raise either seed funding or Series A funding of between €2m and €5m," said Mr Caulfield.

He said that some startups are already starting to seek alternative funding under the UK's Enterprise Investment Scheme, which financiers say is attractive to investors.

"In some cases, the companies are staying here but making themselves qualify for EIS by doing parts of their business in the UK," he said. "In other cases they're actually moving to the UK. Right now it's incredibly easy to raise those kinds of funds in the UK."

In the home market, the biggest issue is that almost all of the seed funds and the series A funds here are in fundraising mode at the moment, he said.

"It's going to remain a very tough fundraising environment here for a while."

Mr Caulfield said that firms seeking amounts of over €10m would continue to have alternative access to venture funding sources abroad.

However, he said that smaller startups, which make up the majority of funding deals in Ireland, are likely to be affected most.

"I would say we're already in a crunch for Series A funding and that a seed crunch is coming," he said.

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