Don’t accept the first offer – choosing the right VC partner is critical
Venture capital is designed for companies with innovative products or services, strong potential and leadership teams capable of delivering rapid growth.
Venture capital funding into Irish SMEs soared to a record-breaking €532.8 million in the first quarter of 2025, according to the Irish Venture Capital Association. This was more than double the level for the same period in 2024 and marked the strongest first quarter ever recorded.
“The record-breaking €532.8 million in venture capital funding into Irish SMEs in Q1 2025 is a strong signal of investor confidence in Ireland’s innovation ecosystem,” says Anna-Marie Turley, head of fintech, financial services and cybersecurity at Enterprise Ireland.
“This surge highlights the growing appeal of Irish tech and life sciences firms on the global stage. However, it also underscores the need for balanced access to funding – especially for early-stage companies seeking smaller rounds.”
But what kind of businesses should consider VC, what are investors really looking for, and how can founders prepare?
Venture capital is designed for high-growth, scalable businesses often in sectors such as technology, life sciences, fintech, AI and sustainability. These are typically companies with innovative products or services, strong market potential and leadership teams capable of delivering rapid growth.
“VC is suited to companies in the innovation economy where investors are willing to take higher risks for the chance of much higher rewards,” says Alan Merriman, chief executive and co-founder of Elkstone Partners. “It’s not suited for lifestyle or family-run businesses that are already profitable. VC is really about backing early-stage companies with the potential to grow into category leaders.”
The Q1 surge was driven by a handful of “megadeals,” including diagnostics firm Let’s Get Checked raising €150 million. Life sciences accounted for 45 per cent of total funding, followed by cybersecurity (22 per cent), software (9 per cent), fintech (8 per cent), and AI/machine learning (7 per cent). In total, 43 deals were completed, slightly up on the 2024 level. International investors played a major role, accounting for 82 per cent of funding.
However, the boom was short-lived. By Q2 2025, VC investment had fallen sharply to €112.6 million, the lowest second-quarter figure since 2015. Fintech dominated, with 41 per cent of the total, followed by life sciences (15 per cent), software (12 per cent), insurtech (11 per cent), AI (11 per cent) and business services (7 per cent). The largest deal was a €37 million raise by payments firm NomuPay.
“Deals in the €30m plus range were down by almost 90 per cent compared with Q1,” notes Edon Byrnes, corporate partner at Ogier. “It remains to be seen whether this downturn will continue into Q3 or whether funding will rebound as it did earlier in the year.”
In exchange for their backing, venture capitalists expect significant financial returns, usually realised through an IPO, trade sale or acquisition. “They look for businesses with the potential for rapid growth and scalability, which can generate substantial increases in value over a relatively short period,” says Dominic Conlon, partner and head of corporate at Ogier.
But it isn’t only about money. Investors often seek a degree of influence over governance and strategy, introducing operational best practices and helping to steer companies through scaling challenges.
“The most interesting aspect of venture is that the founders choose who invests,” says Merriman. “Founders talk to each other, so reputation matters hugely. The best VCs help with go-to-market strategies, recruitment, HR, legal advice and other operational challenges. The expectation is that they add meaningful support, not just write a cheque.”
Government policy also plays a role in shaping the funding landscape. Enterprise Ireland’s Seed and Venture Capital Scheme (2025–2029) has allocated a record €250 million, a 42 per cent increase over its predecessor, to strengthen Ireland’s funding ecosystem for high-growth firms.
The scheme invests in VC funds that support Irish businesses from seed to Series A and beyond, typically co-investing up to 70 per cent at seed stage and 50 per cent at Series A. “This approach not only injects capital into promising start-ups but also brings in global expertise and networks, helping companies scale internationally,” says Turley.
Priority sectors include AI, deeptech, climate and sustainability, foodtech/agritech, life sciences, fintech, and cybersecurity, areas aligned with the State’s long-term growth strategy. The scheme also emphasises diversity, aiming to increase representation among fund managers and investee companies.
So, what should founders do if they’re considering a VC raise?
“The most important step is due diligence: really understand which VCs are likely to be interested in your sector,” says Merriman. “Preparation is key. Founders need a strong deck and a compelling story. A warm introduction makes a big difference, as it reflects well on the founder and opens doors faster. And it’s important not to take the first money offered – choosing the right partner is critical.”
Byrnes recommends that business owners take a staged approach. It begins with a clear business plan that sets out the product, market opportunity and growth strategy. Building a strong management team on top of this foundation is crucial since investors often back people as much as ideas. A compelling pitch then becomes the bridge between the two, communicating both the story and the company’s scalability.
Identifying the right investors is equally important. Founders should research VC firms carefully and make connections through industry events and networks. Once terms are agreed, attention must turn to the cap table, making sure it is accurate and that the dilution impact of new shares is fully understood. Speaking with other entrepreneurs who have been through funding rounds can provide valuable insight into the realities behind the process.
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