Sharp reduction in seed VC funding

/ 16th May 2022 /

Venture capital funding to Irish tech firms grew by 52% to nearly €380m in Q1 2022 though the increase conceals a "potentially worrying fall" in deals under €10m, according to the Irish Venture Capital Associtions (IVCA).

The IVCA's VenturePlus survey, conducted in association with William Fry, shows the amount of VC funding for Irish tech companies rose from €249m to €380m year-on-year despite a decline of 30-50% in deals worth less than €10m, including seed funding.

The number of deals overall fell from 74 in early 2021 to 50 in the first three months of 2022.

IVCA chair Nicola McClafferty reported that all the growth came from eight deals each worth more than €10m, including three over €30m -- Exergyn, Flipdish, and Wayflyer.

Ordering and loyalty platform Flipdish secured secured €40m from Tiger Global Management in February, while finance and growth platform Wayflyer completed a $150m funding round the same month.

Thermal management technology firm Exergyn closed a $35m Series A round in January.

"While the momentum carried over from last year has continued for more established companies raising large rounds, some of that impetus seems to have stalled for earlier stage companies," McClafferty said, citing global economic uncertainty caused by the war in Ukraine.

"While challenging market conditions may continue, we also know that many great companies are started and built in times of downturn, so we await with interest the data in the coming quarters.”

The value of deals between €5m and €10m fell 51% to €11m, while deals in the €1-5m bracket also halved from €70m to €35m year-on-year.

Funding deals under€1m dropped 31%.

Sarah-Jane Larkin, director-general of IVCA, said that 79% of funding came from international sources in the first quarter.

“While this is to be welcomed and emphasises the quality of Irish tech firms and their appeal to international investors, we have expressed concern before about where any shortfall would be made up if the global economy contracts," she continued.

Larkin pointed out that seed funding in the first quarter had fallen by nearly 40% year-on-year, adding that the government’s announcement in February of a new €90m Irish Innovation Seed Fund programme for start-ups is timely.