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VC activity is likely to remain ‘soft’ until after the US presidential elections in November, KPMG predicts.
The value of venture capital deals in Ireland dropped by 59pc in this year’s third quarter between July and September, when compared to the same period last year, according to data from KPMG.
KPMG’s latest Venture Pulse report showed that deals worth $100.9m closed in the country in Q3, hitting an almost seven-year low. In contrast, last quarter’s results showed VC deals in Ireland picking up by 38pc, compared to the same period last year.
This reflects global trends as worldwide VC deals fell from $95.5bn in Q2 to $70.1bn in Q3. Europe also saw a drop from $17.9bn in Q2 to $12.5bn in Q3.
KPMG Europe and Middle East head of technology and media, Anna Scally said that in the case of Ireland, both traditional and corporate VCs pulled back in the third quarter resulting in this downturn.
“However, the recent announcement by the government of a new Seed and Venture Capital Scheme, set to operate from 2025 to 2029, will inject a record $275m into the ecosystem and offers a promising boost,” she said.
There were a total of 28 deals in Ireland during the period. The biggest deals were by two Galway-based firms: Luminate Medical raised $15m and Loci Orthopaedics raised $13.8m.
Today (18 October), Scally told RTÉ’s Morning Ireland that expansions to the Capital Gains Tax relief for angel investors will help start-ups to grow. “With the increased relief cap, investors should have greater motivation to inject capital into early-stage companies, helping them scale and, in turn, contribute to the Irish economy’s growth.”
According to the KPMG report, VC activity in Q4 will likely remain “soft”, particularly until after the US presidential elections in November.
The report forecasts that investment into AI will remain strong, however, while all eyes are on new regulations around AI that are propping up worldwide as governments try to develop guardrails for AI activity.
“AI is expected to remain a very hot area of investment, although there could be a shake-out as investors increasingly focus on companies able to show how they are using AI to generate real value.”
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