Venture capital investment fell sharply in fourth quarter of 2022

Venture capital investment fell sharply in the fourth quarter in Ireland as overseas investors fled the market, new data from the Irish Venture Capital Association showed, leading to a flat year overall.

A total of €1.33 billion was invested in Irish tech companies over the year, according to the IVCA VenturePulse survey, the same figure as in 2021. However, the fourth quarter saw a decline of 47 per cent to €244.6 million, a sharp decline from the same period a year earlier.

Leo Hamill, chairperson of Irish Venture Capital Association, said the fall-off was a cause for concern. “Global trends were reflected in the fact that overseas VC investment in Ireland fell by 73 per cent in the fourth quarter to €58.3 million, from €214 million in the same period last year,” he said. “The flight of international capital in the fourth quarter highlights Ireland’s exposure and the need to boost local sources of funding for scaling companies.”

The VenturePulse data covers equity funds raised by Irish SMEs and other SMEs headquartered on the island of Ireland, from information supplied internally by members of the IVCA and from published information from non-members.

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Among the largest deals of the year were Wayflyer, which raised €134 million and Flipdish, which raised €94 million. TransferMate saw a €66 million during the period, while Fonoa raised €62 million. Carrick Therapeutics raised €60 million during the year, putting it among the top deals.

“Despite a flat year, venture capital funding in Ireland last year performed reasonably well compared to global VC trends in which funding in 2022 fell by 35 per cent to $445 billion,” said Mr Hamill.“It should also be remembered that VC funding in Ireland in 2022 was still 43 per cent ahead of 2020, despite all the global economic challenges and uncertainties faced last year.”

There was little change in seed or first round funding, which rose 1 per cent year on year to €132.2 million. However, the fourth quarter of the year showed a fall of 18 per cent in seed funding, declining to €40.2 million.

“Economic and geo political headwinds experienced last year highlight the importance of having active Irish seed funds in the local market, able to invest in a counter cyclical manner and ensure that great founding teams can build companies in Ireland even during a global downturn,” said Sarah-Jane Larkin, director general, IVCA.