Venture capital funding into Irish tech firms reached €364m between April and June, the highest quarterly total on record.
That figure is up nearly 60% on the same period last year, according to the Irish Venture Capital Association 'Venture Pulse' survey.
Speaking on Morning Ireland, Sarah-Jane Larkin, Director General of the IVCA, said she was surprised to see the surge in second quarter funding.
"The figures are surprising and unusual, but this is very positive news for the Irish economy," Ms Larkin said.
"€364m, the highest quarterly total ever recorded, has mainly been driven by venture capital funds who were well capitalised at the start of the Covid-19 crisis and have been able to invest heavily in their existing portfolio companies. In some cases they have managed to extend these companies cash runway by up to 24 months," she said.
We need your consent to load this rte-player contentWe use rte-player to manage extra content that can set cookies on your device and collect data about your activity. Please review their details and accept them to load the content.Manage Preferences
A third of VC funding in the second quarter went to life science companies, as Ms Larkin explained.
"During this pandemic and post pandemic, there are going to be countries, sectors and individual companies that are winners and losers.
"One of the highest totals raised in the second quarter was by the Irish diagnostics life science company 'Lets Get Checked', who raised an incredible €65m. 54% of overall funding in this quarter has gone into life science and fintech firms and they are two sectors that we know are thriving globally, despite the Covid-19 driven downfall," she said.
While total quarterly funding was up, first time funding during the second quarter fell by almost 60% with only a handful of start-ups raising their first equity rounds. Ms Larkin said this is a big concern.
"What we have seen in the second quarter is VC firms accelerating their investment in existing companies, and that has meant there has been less focus on new deals. New deals also require a level of due diligence which tends to happens in person and during the months that we are talking about here that was not possible," she said.
Ms Larkin said it is important to note that there are other investors who play a really critical role for businesses at the early stage, such as angel investors and individuals.
"We know from the last economic downturn that those people tend to be cautious due to the levels of economic uncertainty, so I think that one of the smartest things we could do right now is to incentivise personal risk taking by those individuals."
The IVCA is calling for urgent and temporary changes to the Employment and Investment Incentive Scheme, as Ms Larkin explained.
"The EIIS provides tax relief of up to 40% but investors naturally tend to gravitate towards lower risk investment areas such as property or nursing homes. We need to encourage more private investment in higher risk, high tech start-ups by increasing tax relief in these companies to a much higher level than the current 40%," she said.
