Tuesday 23 October 2018

Tech firms land record €1bn in VC funding

Nuritas CSO and founder Dr Nora Khaldi and CEO Emmet Browne — the high-tech food analytics firm raised €16.5m in December
Nuritas CSO and founder Dr Nora Khaldi and CEO Emmet Browne — the high-tech food analytics firm raised €16.5m in December
Adrian Weckler

Adrian Weckler

Ireland's venture capital boom continues to grow with new figures showing that Irish tech firms raised €994m last year, a new high for the industry.

The record cash haul was fuelled by a handful of huge individual rounds, such as €100m raised by Belfast-based financial cloud firm Options and €90m raised by the Dublin-based IT service company, Version 1.

However, hundreds of companies managed to raise money here last year, with the majority of the rounds under €10m and going to firms seeking expansion capital.

The figures comes from a survey completed by the Irish Venture Capital Association (IVCA) in association with William Fry.

The €994m tally indicates that venture cash is now a mainstream source of funding for thousands of Irish startups, businesses and entrepreneurs.

The figures do not include a number of financing arrangements involving 'friends and family' deals or some state-backed schemes.

Software firms led the funding league in volume of individual rounds, with 28 deals done.

Life sciences companies were next, with 23 deals recorded, while financial technology firms saw 18 funding deals completed.

"While 2017 was a record year it is worth noting that the year-on-year growth rate of 12pc compares to a 70pc growth rate in 2016 so there is no room for complacency," said Peter Sandys, chairman of the IVCA.

"With continuing uncertainties over the impact on Ireland of Brexit, lower US corporation tax rates and possible US trade wars, it is more important than ever that we continue to build an indigenous knowledge-based economy."

Other significant deals last year included Barry Napier's Cubic Telecom, which raised €40m, bringing the company's total funding close to €80m.

The company, which employs 160 people in Sandyford, has deals in place with approximately 80 mobile operators around the world. It recently began trials with China Mobile, the world's biggest operator.

Transfermate, a Kilkenny-based payments firm co-founded by Sinead Fitzmaurice, raised €30m in November. Smaller rounds included €10m each for telecoms firm Blueface and Atlantic Therapeutics.

Transfermate was the high point for venture rounds going to companies with at least one female co-founder.

However, Nuritas, a high-tech food analytics firm founded by Dr Nora Khaldi, also raised €16.5m in December.

The new figures again show that where female-founded startups do land funding rounds, they still get far less than that allocated to their male peers.

The average funding round in Ireland for a tech firm with at least one woman founder is less than €2m, compared to €6m for a startup founded by a man.

The survey also shows that women have almost no chance of becoming CEO in an Irish VC-funded tech company unless they personally start the company.

However, Sarah-Jane Larkin, IVCA director general, said that funding for growth and expansion represented 85pc of the total funds raised.

"It is noteworthy, however, that seed and early stage [funding] grew significantly, reaching a high of €131m for the year, up from €70.2m in 2016," she said.

Larkin said that international investors accounted for 63pc of the funding raised by Irish SMEs in 2017.

"It is important to recognise the role of Irish-based venture capital firms both through direct investment and as the local lead investor for international syndicate investors," she said.

"International VCs are often encouraged by the due diligence implications of early stage funding by a local VC."

Larkin said that the sectoral spread of investments in 2017 reflects Ireland's growing tech capability and clusters that have developed like the medical device sector in Galway.

She said that since the onset of the credit crunch in 2008, in excess of 1,400 Irish SMEs have raised venture capital of €4.5bn.

"These funds were raised almost exclusively by Irish VC fund managers who during this period supported the creation of up to 20,000 jobs, attracted over €2bn of capital into Ireland and geared up the State's investment through the seed and venture Capital Programme by almost 16 times," she said.

The IVCA VenturePulse survey shows that Irish companies raised €994m from investors in 2017. This compares with funds raised of €888m in 2016 and €522m in 2015.

Fourth-quarter funds raised in 2017 were €177m compared to €154m in the same period in 2016.

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