Venture capital funding for Irish SMEs falls by 58%

Sarah-Jane Larkin, director general, Irish Venture Capital Association. Picture: Fennell Photography

Irish technology SMEs raised €221.7m in venture capital in the first quarter of 2026, a fall of 58% compared to the same period last year, according to the Irish Venture Capital Association (IVCA).

The IVCA VenturePulse survey published on Sunday showed international investors accounted for 85% of the capital raised during the quarter. The top five deals of the quarter were Neurent Medical (€62.5m, medtech/life sciences), Aerska (€33m, biotech/life sciences), Evervault (€21m, cybersecurity), Circit (€20m, fintech) and XFuel (€18.5m, environmental industries).

“While funding fell across most deal sizes, the outcome must be seen in the context of an exceptionally strong start to last year, when Irish firms raised more than half a billion euro, which was a record for a first quarter,” said IVCA chair Caroline Gaynor. “This is glass half full territory as it once again highlights our exposure to overseas investment, but also emphasises the appetite for quality Irish tech firms, despite unprecedented spending on AI in the US.”

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 AI and machine learning accounted for just 2% of the total on a sector basis though AI is likely embedded in many of the products and services listed in the survey. Life sciences led the way in the quarter, accounting for 54% of the total, or €119.5m, followed by fintech at 13% (€28m) and software 12% (€26.9m). While AI represented just 2% of the total on a sector basis.

IVCA director general Sarah Larkin said that it was hard to predict the impact of the Iran War on the next quarter.  “Ireland is a small market subject to global geopolitical headwinds. But local policy initiatives may mitigate against this to the benefit of early stage Irish start-ups looking to raise funding this year," Ms Larkin said.

Funding declined across all deal-size bands except transactions of less than €1m. In the €3m to €5m range, investment fell 77% to €7.9m from €35m a year earlier. Deals worth between €5m and €10m dropped 62% to €16.5m from €43.8m over the same period.

The study, published in association with corporate league firm William Fry, estimated that employment numbers in venture and private equity backed firms grow by an average of 27%, compared to an overall increase in employment in the economy of just over 3% per annum over the same time period.