Despite challenges caused by Covid-19, venture capital funding into Irish SMEs grew by 13% to €925m in 2020, compared to €820m the previous year, according to the latest Irish Venture Capital Association (IVCA) VenturePulse survey published today in association with William Fry.
However, deals under €5m, which represent start-ups and early stage indigenous companies, fell byalmost a third (32%) to €194m in 2020 from €285m the previous year. The IVCA said that the trend had accelerated in the fourth quarter of 2020 when deals under €5m fell by 50% to €41m compared to €82m in the same period the previous year.
The overall growth in 2020 was accounted for by deals over €5m. Funding in the €5-10m range doubled to €204m in 2020 from €102m the previous year. In addition, deals above €10m were up by almost a third (31%) to €568m from €433m.
It was a good year for life sciences companies which raised €332m, or over a third (35%) of 2020 funding followed by software (29%). Indeed, life sciences has topped the funding league for the second time in three years and has grown from just 4% of the total in 2004.
The balance of funding in 2020 was made up of fintech (12%); environmental (5%); agtech (3%) and other (16%). There was an increase in the value of deals over €30m. Six firms in 2020 raised over €30m or a total of €353m compared to three firms in 2019 which raised €147m.
Commenting on the findings, Chairperson at Irish Venture Capital Association, Gillian Buckley said, "Despite the positive overall figures in a difficult year, the data highlights a concern that early stage companies are finding it increasingly difficult to raise funds. It is vital that we nurture the pipeline and indigenous stars of the future. We won’t have successful high growth firms raising €5m plus in three years if entrepreneurial companies are starved of early funding now."