Venture capital funding to Irish SMEs fell sharply in the first quarter of the year, according to the latest survey from the Irish Venture Capital Association.
Its Q1 Venture Pulse survey recorded €221.7m in SME fund-raising in the period - down 58% year-on-year.
IVCA director general Sarah-Jane Larkin said that the figure had to be seen in the context of a particularly strong start to 2025, but it should serve as a warning sign nonetheless.
"I think this is a slight warning sign and a cause for concern," she said. "The quarter last year was a record first quarter of over €500 - so we're comparing it to a very strong quarter last year.
"Notwithstanding that, I think there are some warning signs over the last number of quarters that show that Ireland is a very small market ad we have a significant exposure to overseas capital."
Life sciences made up more than half of the total figure, with fintech making up 13% and software firms accounting for 12%.
The biggest deal in the quarter was Neurent Medical - which raised €62.5m. That was followed by a €33m fund-raising by Aerska.
The dominance of life sciences in deal-making here comes at a time when AI is dominating the global VC market.
Ms Larkin said that AI was an important part of what Irish SMEs are offering too - though most are embedding the technology rather than focusing solely on it.
"In Ireland, AI is is not unimportant - it is applied across all sectors," she said. "Any company that is raising funding has to have some level of AI embedded in their product or service to achieve funding.
But... we have yet to see a pure play AI company raising significant funding in Ireland."
The quarter saw a 62% drop in deals worth between €5m and €10m, while deals worth between €3m and €5m fell by 77%.
While deals do not involve blockbuster figures they are seen as important indicators of the health of the industry.
Ms Larkin said the figures once again highlight the need for more to be done to develop a strong domestic funding market.
"What is really welcome are the domestic policy supports that we've seen here to mitigate some of the exposure that we have to fickle overseas capital," she said, citing an increase in Enterprise Ireland's investment levels and the Government's €250m seed and venture scheme.
"We're very good at starting companies but because we don't have enough scaling finance available," she said. "We are often in the business of de-risking these companies and making them attractive to international buyers.
"With the job losses in the multinational sector that we're starting to see, I think it makes it crucially important that we are funding these high growth potential Irish firms that are capable of staying here, expanding here and becoming employers of scale in the future."
