Venture capital activity in Ireland followed the global trend downwards between April and the end of June, a report from KPMG has found.
A total of 33 deals worth $172.5m closed in the three month period, a 17% reduction on the value of deals reached in the same period last year.
44 VC deals worth $207m were recorded in the second quarter of 2022.
Economic and geopolitical challenges continue to impact investment globally with all key regions recording a decline in activity.
Higher interest rates, inflation, and geopolitical issues, such as the ongoing war in Ukraine, weighed on sentiment and activity in the sector.
Globally, the VC investment landscape clocked up its sixth consecutive quarter of decline.
The value of deals fell from $86.2 billion across 10,121 deals in the first quarter to $77.4 billion across 7,783 deals in the April to June period.
A separate report from KPMG on the FinTech (Financial Technology) sector showed that activity has also declined significantly this year.
Nine FinTech deals closed in Ireland in the first half of the year worth $59.2m.
That was down from $742m across nine deals seen in the second half of last year.
However, that figure was sharply skewed by one large transaction - the purchase of Cork-based Global Shares by JP Morgan for $676m, by far the largest deal in the last 12 months.
The most significant VC deal in the quarter was in the fintech sector when $53m was raised by unified payments company NomuPay.
The next biggest deals by size were the $32m raised by medical device company Neuromod, and renewables-focused energy transmission company SuperNode, which raised $17m.
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"VC funds benefited significantly in the years prior to 2022 when interest rates were low and non-traditional investors were looking for alternative investment opportunities. With a higher interest rate environment, investors have more choice," Anna Scally, KPMG Partner and Head of Technology and Media in Ireland explained.
"This environment makes it more challenging for funds to secure investment and ultimately for companies to secure VC investment. However, investors are still looking for that sometimes elusive combination of innovation, value and opportunity, and great businesses will continue to secure funding," she added.
A continued cautious approach is expected to be adopted by venture capital investors in the months ahead.
"High-priority areas like alternative energy, medtech, cleantech, fintech, artificial intelligence and generative AI will remain attractive for investment in the coming quarters," Anna Scally said.
