Venture capital funding to Irish tech firms rose by 8.9% in the first three months of the year, as the number of deals agreed rose significantly.

A total of €249.4m was raised in the quarter, compared to €228.9m in the same period of 2020.

That came on the back of a 13% rise in fund-raising during 2020.

According to the IVCA's latest VenturePulse report, conducted in association with William Fry, the money was raised across 74 deals – an increase of 65% year-on-year – with a larger number of smaller deals agreed.

"What we noticed last year was a trend that a lot of the funding was going to more established companies and they were larger fund-raising rounds," said Sarah-Jayne Larkin, director general of the Irish Venture Capital Association. "What we are seeing this year is a particularly welcome recovery at early stage."

Funding to start-ups and early stage companies fell by about a third last year, which created concern in the sector, however they saw a solid recover in the early stages of this year.

The IVCA said that deals in the €1-5m category jumped by 84%, while the number of deals worth less than €1m grew by more than 50%.

"I think the reason for that is that last year a lot of venture capital funds made sure that their existing portfolio of companies had enough runway for maybe 24 months, to see them through the pandemic," said Ms Larkin. "Whereas this year we’re starting to see a rebound, and a very welcome rebound, in the early stage of funding."

This increased activity at younger companies was important, as it would boost the pipeline of firms that would be seeking larger amounts down the line.

Ms Larkin said that the overall figures also highlighted some of the consequences of the pandemic, with some firms fundraising to ensure they could comfortably stay afloat, and others doing so in order to help them reorientate their operations in the face of new market challenges.

"We all know that the digital transformation has accelerated over the last year, it’s taken a jump forward of about 10 years in the last 12 months," she said. "One of the other things that was reported recently was the increase in household savings… I think we’re all aware that we have a property investment culture in Ireland and I think what these findings show is that we really need now to build an equity investment culture here and take measures that will help build that culture."