Venture capital funding environment for Irish AI start-ups 'challenging' 

EY report noted while Ireland had emerged as a strong adopter of AI among start-ups, many are struggling with access to capital and infrastructure

Grit Young, EY Ireland’s technology, media and telecoms lead: For AI start-ups, the funding environment remains challenging, particularly in the €1m to €10m funding space.

Despite venture capital investing heavily in generative AI during the first half of the year, Irish AI start-ups are finding the funding environment “challenging”, a new report from consultancy company EY has found.

Between January and June, global venture capital investment in generative AI surged to $49.2bn (€42.5bn), outpacing the total for all of 2024 at $44.2bn, according to EY Ireland’s latest Generative AI Key Deals and Market Insights study.

The company said the sharp rise comes as venture capital firms concentrate on more mature, revenue-generating AI companies, resulting in fewer but significantly larger deals. Average transaction size for late-stage deals more than tripled to more than $1.55bn, up from $481m in 2024.

EY Ireland’s technology, media and telecoms lead Grit Young said this investment momentum was expected to continue to build into the second half of this year with the launch of new generative AI platforms.

However, the report noted while Ireland had emerged as a strong adopter of AI among start-ups, many are struggling with access to capital and infrastructure.

“In Ireland, the appetite for AI adoption is strong, and we are working with many indigenous and international companies who are already well established on their AI journey,” Ms Young said.

“However, for AI start-ups, the funding environment remains challenging, particularly in the €1m to €10m funding space.” 

She added many start-ups with high potential were finding themselves in a difficult middle ground where they are “too advanced for early-stage support, yet not quite large enough to attract global venture capital attention”.

“However Ireland has a deep and well-established pool of talented entrepreneurs, and with increased collaboration between businesses, founders, academic institutions and policymakers, there are plenty of opportunities to be seized,” she said.