Venture capital funding for Irish small and medium sized enterprises (SMEs) rose just 2% last year, amid a significant fall off in the second six months.
In total €1.35bn was invested in SMEs over the twelve months, the latest VenturePulse report from the Irish Venture Capital Association (IVCA) in association with William Fry shows.
But despite the overall growth for the year, funding in the fourth quarter actually dipped by 16% compared to the same period a year earlier, to €204m.
"The first half of 2023 looked extremely strong with €963m of investment, however the second half saw a marked decrease with only €394m," said IVCA chairperson, Denise Sidhu.
"This is not totally surprising in a year where VC funding globally fell by 38%1 in 2023 and by 25% in the final quarter compared to same period in 2022."
Start-ups that were seeking to raise less than €5m fared better than those seeking bigger funding rounds.
Funding in the €3m-€5m range increased by over a third in the final quarter compared to the same period in 2022, with those in the €1m- €3m category growing 170% and those under €1m rising by 8%.
In the €10-€30m category funding fell by nearly a half to €208m during the year, while funding for the final three months also dropped by almost a half to €30m compared to the same quarter in 2022.
While in the €5-€10m range funding fell by over a quarter to €105.5m in 2023, with the trend accelerating in the last quarter.
"This data highlights the risk of these highly innovative indigenous firms hitting a brick wall just at a critical time in their growth trajectory due to the lack of locally sourced scaling finance," said Ms Sidhu.
International funding into Irish tech SMEs amounted to two thirds of the total for the year, underlining the reliance on overseas cash.
Envirotech raised 45% of total funds in 2023, followed by life sciences which secured 17% and software which received 8%.
The rapidly growing AI and machine learning segment represented 7%.
