Irish start-ups reliant on ‘informal’ funding

Irish start-up companies are becoming increasingly dependent on “informal” funding avenues — such as business angels and family/friend investors — to attract vital early stage capital, a new report has suggested.

The first edition of a quarterly “entrepreneur watch” from the Ryan Academy for Entrepreneurship, at Dublin City University, states that, on average so-called “informal venture capital funds” exceed formal venture capital investments for start-ups by a ratio of 5:1.

The DCU team said that informal investors pumped around €275 million into new businesses during the year. Only around €80m of that came from 3,000 business angel investors; with the remaining €195m coming in the form of “love money” via friends or family.