Business Technology

Tuesday 25 September 2018

Irish tech boom sees VC cash hit €1bn in a year

IVCA chairman Peter Sandys. Photo: Fennell Photograph
IVCA chairman Peter Sandys. Photo: Fennell Photograph
Adrian Weckler

Adrian Weckler

Annual venture capital funding has exceeded €1bn in Ireland for the first time, new figures show.

Around €1.08bn was raised here for tech and life science firms between April 2017 and April 2018, marking a new level of cash being distributed around the Irish tech industry.

The financial haul for tech firms, which lifts Ireland into a higher venture funding tier occupied by countries such as Sweden, was buttressed by a handful of record-breaking individual Irish funding deals.

These high-flying cash rounds included €100m raised earlier this year by Limerick-based truck software firm AMCS, €101m landed by software company Intercom and €40m raised by Fire 1, the medical technology company operating out of Nexus UCD.

The vast majority of the money raised was invested into tech or biotech companies.

The first three months of 2018 saw a 34pc rise in venture capital compared to the same period in 2017, partly because of large individual rounds.

However, the figures also show a sharp fall in the number of deals recorded during the quarter, down to 22 compared to 48 investment deals recorded during the same period a year ago.

And they indicate a growing imbalance between marquee investment deals and 'seed' investments, which typically help startups more.

In the first quarter of 2018, the amount of seed finance pledged to startups fell by 50pc compared to the same period in 2017, and it now represents just 1pc of the overall venture capital invested. There has also been a marked decline in deals below €5m.

"The second quarter will give us a better picture as to whether we're witnessing an underlying softness in 2018," said Peter Sandys, chairman of the Irish Venture Capital Association (IVCA), which published the figures in association with William Fry.

"The significant jump in funding raised year-on-year is primarily due to two €100m funding rounds."

Mr Sandys said that "international uncertainties made it more important to continue to build a strong indigenous technology sector".

Software and life sciences remain the primary industrial sectors gaining most of the investment.

"The Irish venture capital community continues to be the main source of funding for Irish SMEs both through direct investment and as the local lead investor for international syndicate investors who invested €195m, or 58pc, of total funds raised in the first quarter of 2018," said Sarah-Jane Larkin, director general of the IVCA.

"It is significant that much overseas investment has come across the Atlantic from the US rather than from Europe and has funded larger deal rounds.

"This lack of capital in the European market was highlighted recently when the European Commission announced a pan-European venture capital fund of funds programme called Venture EU, aimed at triggering increased availability of capital and doubling the amount of venture capital currently available across Europe."

Globally, tech companies have increased their dominance as the world's most valuable companies.

Amazon and Apple are currently tied in a race to become the first trillion-dollar company by valuation.

Apple, Google and Microsoft currently hold around €500bn in cash reserves from recent trading performances.

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