The Irish Venture Capital Association's latest Venture Pulse survey shows that venture capital funding into Irish technology SMEs in the third quarter fell by 38% to €190m from €309m.
The survey is published in association with William Fry.
The IVCA said that the third quarter data "raised alarm bells" and that funding across almost most levels "fell significantly".
The largest deals agreed in the third quarter were the 460m Ocuco deal in the Software sector, the €32m Shorla Oncology dead in the Life Sciences sector and the 426m UrbanVolt deal in the Environment sector.
Today's survey shows the sectors that were most successful in raising funding in the nine months to end September included Envirotech or clean energy which raised €580m or 50% of the total VC investment.
This was followed by the Life Sciences sector at €157m of 14% of the total, the Software sector with €92m of deals (7.9%), AI & machine learning sectot with €88m of deals (7.6%) and the Fintech sector with €82m of deals - 7% of the total.
"Following a strong first half, overall funding for the nine months to end September 2023 just about held up, with an increase of 6% to just over €1 billion, compared to the same period last year," commented Denise Sidhu, chairperson of the Irish Venture Capital Association.
"However, the Irish third quarter data raises alarm bells, as the value of deals across all sizes fell significantly, with the exception of those under €1m," Ms Sidhu said.
She noted that the number of transactions fell by 26% compared to the same period last year.
The value of deals in the third quarter in the €3-€5m range fell by over a third to €193.8m compared to almost €300m in the same time last year, while he value of deals in the €5-€10m range dropped by over three quarters, the survey shows.
Sarah-Lane Larkin, director general of IVCA, said that another worrying indicator was that the value of international VC investment in the third quarter fell by 69% or by over €120m.
"The reliance on international VC investors at a time when US venture capital and private equity investment has slowed significantly, emphasises the need for Ireland Inc to build local private funding sources in order to combat global dependence and headwinds," she added.
