Scaling companies 'struggle' to secure private investment

IVCA director general Sarah-Jane Larkin and chairman Gerry Maguire. Picture: Fennell Photography

Venture capital funding into Irish companies showed signs of rebounding as economic conditions become more favourable for investors, but firms looking to scale still struggle to secure investment. 

Irish Venture Capital Association (IVCA) figures showed investment into small and medium sized enterprises reached €494m in the three months to the end of June, surging 7% on the same period a year earlier and climbing to the second highest level on record.

However, smaller deals in the rage of between €5m and €10m plunged annually by 44% to €27m, a trend that IVCA chairman Gerry Maguire described as “worrying”.

“It suggests that companies are doing well raising early stage seed funding but are struggling to kick on in the next vital growth phase,” he said.

Around 90% of this funding came from international investors, which Mr Maguire said is “a testament to the quality and ambition of Irish companies” but also “highlights the need to increase the availability of growth finance from local sources”.

The first of several interest rate reductions was announced by the European Central Bank (ECB) in June as inflation cools down towards the regulator’s target of 2%, which may have sparked a flurry of investment activity in the second quarter as economic conditions stabilise.

However, venture capitalists remain somewhat cautious as the IVCA’s VenturePulse survey, published in association with William Fry, suggested the continue to engage in deals relating to larger more established companies.

The companies that raised the most funds in the quarter ending in June were regulatory compliance company Corlytics which raised an undisclosed amount, life sciences firm SynOx Therapeutics with €70m, fintech company AccountsIQ with €60m, cybersecurity specialist Tines with €50m and marine technology firm XOCEAN with €30m.

Overall funding for the half year plummeted by almost a quarter to €753m compared to the same period in 2023, despite investment activity ticking upwards in the second quarter.

The life sciences sector with €297m led the way in funding for the half year, followed by envirotech, regtech, fintech, and software.