Venture capital investment in Ireland down 17% with fintech hit hard

According to the reports, the slowdown is down to increasing interest rates, high inflation, and geopolitical issues such as the protracted war in Ukraine

Between April and June, 33 venture capital deals were closed in Ireland worth a combined $172.5m (€158.4m) — which is down 17% from $207m across 44 deals during the same period in 2022.

Venture capital investments in Ireland have fallen by 17% compared to last year with fintech being hit particularly hard, two new reports from accounting firm KPMG show.

According to the reports, the slowdown in investment in Ireland has been impacted by increasing interest rates, high inflation, and geopolitical issues such as the protracted war in Ukraine. It is a trend that is being seen across the world. 

Between April and June, 33 venture capital deals were closed in Ireland worth a combined $172.5m (€158.4m) — which is down 17% from $207m across 44 deals during the same period in 2022.

During the first six months of the year, nine deals involving fintech companies were closed, worth $59.22m. One company, Dublin-based unified payments company NomuPay, raised $53m during this period.

Other notable fintech deals include Outmin, an automated accounting and bookkeeping platform, and Dimply, which is developing a customer interface for financial services providers, which both raised over $2 million each.

However, during the same period in 2022, nine deals were closed but the combined value was $742m which was bolstered by a huge investment of $676m by J.P Morgan in Cork-based Global Shares.

Ian Nelson, head of financial services at the firm, said the long-term view is that there are strong business cases for many subsectors within fintech to remain robust, notably within regtech, payments, insurtech and wealthtech.

“We expect that funding will rebound when market conditions begin to even out, if not necessarily to the record level experienced in 2021,” he said.

Other large deals made this year, outside of the fintech space, included medical device company Neuromod raising $32m and renewables-focused energy transmission company SuperNode raising $17m.

Globally, venture capital investments have declined for the sixth straight quarter. During the first three months of the year, 10,121 were closed worth $86.2bn. This dropped to 7,783 deals worth $77.4bn between April and June.

Global funding in fintech dropped from $63.2 billion across 2,885 deals in the first six months of 2022 to $52.4 billion across 2,153 deals during the same period this year.

Anna Scally, head of technology and media in Ireland for KPMG, said venture capital investors benefited from lower interest rates but with rates now going up “investors have more choice”.

"This environment makes it more challenging for funds to secure investment and ultimately for companies to secure venture capital investment,” she said.

“However, investors are still looking for that sometimes elusive combination of innovation, value and opportunity, and great businesses will continue to secure funding.”