THE IRISH VENTURE Capital Association has warned that bumper deals have masked a “softening” in the funding market.
Irish-based firms reeled in €332 million in venture funding in the first three months of 2018, according to the venture capital group’s investment tracker.
The latest figures mark a growth of 34% on the same period last year when Irish-based firms raised €246.7 million.
However, the association noted that this growth is down to a small number of very large investments rather than an overall growth in the market.
Irish-founded Intercom and Limerick software firm AMCS both raised €100 million each during the first quarter. These two rounds accounted for more than half of all funding.
Irish Venture Capital Association (IVCA) chairman Peter Sandys said the next three months will give a better picture as to whether “we’re witnessing an underlying softness” in 2018.
It’s important to note that the IVCA’s data covers investment not just in Irish SMEs and startups but also international companies that may be headquartered in Ireland and have the majority of their business abroad.
The IVCA figures show that a large portion of VC money in Ireland is flowing into businesses in areas like life sciences and software.
IVCA director general Sarah-Jane Larkin said that there is still a notable lack of seed funding in Ireland as well as a decline in smaller investments.
Seed funding made up just 1% of deals in the first three months of the year, while the number of funding rounds below €5 million dropped by 16% and declined over a quarter in value.
Larkin noted that most investment in Irish SMEs still comes from Irish VC firms, whether as lead investor or as part of a bigger round with international backers.
“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, she said.”
There is a lack of VC money in Europe when compared to the US, she added.
The European Commission recently launched VentureEU, an initiative to raise more money for VCs on the continent.