Investment activity in Ireland could reduce by up to 50pc depending on how long the Covid-19 pandemic lasts, according to a survey carried out by the Irish Venture Capital Association (IVCA).
The survey was carried out among IVCA members to gauge the anticipated impact of the virus on future investment strategy. Members include SOSV, which has over $700m (€640m) worth of assets under management, and Delta Partners, which has €250m under management.
According to Sarah-Jane Larkin, director general of the IVCA, respondents indicated that investment activity could reduce by 20pc under the current lockdown measures until May, but may worsen if the rules continue into September.
She said: "People would have targeted a certain amount of capital to deploy, and the estimates in the likely reduction are narrowing from around 20pc, so we can say with some certainty there will be a 20pc hit this year.
"But, depending on the period of isolation, it could go to as much as 50pc."
The IVCA's latest figures show €820m was invested into Irish SMEs last year.
Using this sum, a 20pc reduction in investment would result in a €164m hit in funding, while a slowing of 50pc would result in a slashing of €410m.
Larkin said the period may impact on fund valuations and could result in "a very destructive time" for funds and the industry: "There is a concern that likely valuation hits may wipe out a firm's track record, making raising future finance difficult."
She added that some investors, such as angel investors and family offices, may "disappear for a while".
Larkin called on the Government to do more to support early-stage companies and those scaling up. Without additional support, she said there was a "strong chance we will see the loss of a generation of future Irish unicorns". A unicorn is a privately held startup valued at over $1bn.
She recognises that the State has put huge supports in place, but feels more is needed: "Much of the effort so far is based on supporting companies that are operating successfully, as opposed to those getting off the ground."
Larkin highlighted the €1.2bn ESCALAR startup fund launched last week by the European Commission, noting that while Irish companies and VCs can access it, "the lion's share of European support has gone to the larger European countries, like France and Germany".
She said a local version would be "really welcome".
Sunday Indo Business