Angel investors increase funding for company startups amid tech worries

Halo Business Angel Network director John Phelan

Adrian Weckler

Angel investment into startups from individuals and syndicates increased by 81pc last year to €33m, according to new figures from the Halo Business Angel Network (Hban).

The rise in funding came as overall investment in tech companies and startups stayed flat at €1.3bn, still a joint record for tech funding in Ireland.

More than 300 Hban members put money into startups in 2022, making 699 individual investments in a total of 86 deals, up 21pc on 2021’s tally.

Hban, a joint initiative of Enterprise Ireland and InterTradeIreland, said that investment from this group had not fallen in the current tech industry squeeze to the same degree that has affected larger companies.

It described the last quarter in 2022 as “strong” with 26 deals, compared with 60 deals in the previous three quarters.

It added that 13 of those 26 deals were new deals at €5.4m invested and 13 were follow-on deals at €11.25m invested.

Other investment-tracking organisations in Ireland say that there was a sharp fall in funding in Ireland in recent months, with the Irish Venture Capital Association reporting a 47pc drop in cash for startups in the final three months of 2022.

Hban said that 30pc of the deals closed last year were investments in either female-led or female-founded companies, while 23pc of the deals had Hban female angel investor participation.

Hban promotes the development of business angel syndicates in Ireland. According to the organisation, syndicates made up 79pc of the deal activity in 2022.

Its investors have ploughed €177m into more than 730 startups on the island of Ireland since 2007, the organisation said.

The all-island director of Hban, John Phelan, said that for every euro invested by angels, more than two additional euro was raised as leveraged funding connected to the deals.

“Our network of investors have a direct impact on a company’s ability to leverage additional funds from other sources,” he said.

“As early-stage funders, angel investors are giving the businesses of the future the best chance of success. We are proud to announce the most successful year to-date, thanks to the growing network that the Hban teams around the country have created.”

So far, 2023 has proven to be a tough year for technology startups.

The collapse of Silicon Valley Bank (SVB) in the US has eliminated a significant source of funding for Irish tech companies and started a ripple effect among business-facing banks that is still disrupting access to finance.

Despite the crunch, executives associated with Hban were keen to talk up the network’s potential.

“I would like to congratulate the Hban team on their achievement in 2022, a year when we saw a tightening investment market internationally,” said Leo Clancy, CEO of Enterprise Ireland.

“Every year Enterprise Ireland directly funds over 130 startups through our pre-seed and HPSU [High Potential Start Ups] funding programmes. These companies require additional capital to develop and our Hban programme is designed to provide support to the business angel community through deal introductions and building of syndicates to become robust investment groupings.”