Ireland set for another strong year of venture capital activity

Venture capital activity in Ireland may have declined in 2017 versus the previous year but it was still the second strongest performance in more than a decade, according to new figures compiled by PitchBook.

Moreover, PitchBook, whose cloud-based subscription-only database is regularly consulted by top venture capital firms across the globe, has forecast another good year for VC activity with the likelihood of stronger funding rounds here than in the past.

According to figures supplied by PitchBook, some €458 million in capital was invested in the Republic in 2017. This is down from €620.5 million in 2016, but the second highest in more than 10 years.

Deal count was significantly lower than in previous years, with 89 deals closed overall in 2017. This compares with 128 in 2016 and 359 in 2014.

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A breakdown of last year’s deals shows 22 were for angel/seed rounds. A further 50 were for early VC, with 17 for later VC rounds.

Some 33 deals recorded were in the €5 million-€10 million range, with a further 32 valued up to €1 million.

In addition, there were three deals in the €10 million-€25 million range and six that were valued at a higher amount.

Just over a quarter of all Irish deals recorded had US investor participation totalling a combined €179.4 million.

"Historically, deals in the Ireland region have taken place more in the earlier stages, but the maturing venture ecosystem as well as support from outside investors have helped start-ups raise larger rounds," PitchBook analyst Cameron Stanfill told The Irish Times.

“With more established tech hubs, a strengthening exit environment and entrepreneur-friendly regulation, the Irish VC ecosystem is expected to continue flourishing,” he added.

It should be noted that PitchBook's data differs from figures produced by the Irish Venture Capital Association (IVCA), which has forecast that Irish tech firms raised a record €1 billion last year.

The IVCA data draws on different information primarily supplied by its local members.

PitchBook uses input from more than 200 search professionals with machine-learning and natural language processing technologies to gather its information.

According to the company’s European Venture report published last week, 2017 was a record year with €16.9 billion in capital invested. However, the deal count trended downwards for the third consecutive year to 3,306, the lowest number since 2012.

Contrary to earlier indications, 2017 proved to be a rebound year for VC-backed initial public offerings with more than €3 billion raised across 53 offerings.

About €1.2 billion worth of deals last year were in AI-related start-ups, a new record.