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While bigger funding rounds blossomed, the situation for firms raising under €5m was ‘choppy’.
A record €1.48bn was invested into 217 Irish tech SMEs by venture capitalists last year – a 9pc growth from 2023. This is according to the Irish Venture Capital Association’s (IVCA) latest Venture Pulse report, which also noted a record fourth quarter at the end of the year that saw €535m in investment – which is 162pc higher than the same period in 2023.
Last month, Dublin-based medtech Fire1 announced that it raised €116m, which made it the largest funding round in Q4, the report stated, followed by Louth-based sea-drone developer, Xocean, which raised €115m, and travel software firm Nuitée, which raised €46m.
The report, published in association with William Fry, found that the life sciences sector accounted for 37pc (€552.9m) of the total raised last year, followed by software at 13pc (€185m) and envirotech at 11pc (€161.7m).
The director-general of the IVCA, Sarah-Jane Larkin, said that the fourth quarter and annual data emphasised the potential for the new Government to support investment in early-stage companies.
“AI company, Nuritas, for example, raised €42m in quarter four but its first round back in 2015 was just over €100,000. Co Louth-based company, Xocean raised €115m in this quarter and is now a world leader in sea drone technology.”
Larkin added that current global economic and political turbulence – largely driven by the new administration in the US – means that the Government’s €250m Seed and Venture Capital Scheme “couldn’t come at a better time”.
While unsurprisingly, artificial intelligence (AI) accounted for a considerable percentage of VC investments in Ireland, as was the case for the rest of Europe.
According to the report, more than €100m of the total VC investment into Irish firms last year was centred around AI, and the impact of DeepSeek, the Chinese AI start-up currently making waves in the global tech industry, is only expected to increase VC appetite in the sector.
Gerry Maguire, chair of the IVCA, said: “The arrival of players such as DeepSeek has the potential to boost margins and decrease development costs for AI start-ups.
“We are potentially witnessing the democratisation and ease of participation by AI developers, in the same way that software-as-a-service or cloud computing transformed and disrupted the traditional software model.
“There is massive potential in AI applications across healthcare, climate, education and other sectors, and this will be boosted by lower costs of development which represents a major opportunity for Ireland.”
He added that the record high level of investments in Irish tech SMEs demonstrates the country’s “capacity to create and scale world-class tech firms”.
However, by contrast, the situation for firms looking to raise less than €5m is “choppy”, said Maguire. According to the report, deals in the €3m to €5m range fell by 37pc to €82m last year, and by 56pc to €17.6m in the final quarter.
Similarly, funding in the €1m to €3m category fell by 24pc during the full year and by 63pc in the final quarter, while investments under €1m fell by 4pc for the year and 19pc for fourth quarter.
Moreover, seed funding also fell, the report found. According to IVCA, funds raised by SMEs on their first round fell by 4pc for the full year and by 55pc in Q4.
Q3 investments last year were just 1pc ahead of the same period in 2023, a previous IVCA report noted, performing better in comparison to the global trend where investments fell by 15pc year-on-year. While KPMG reported that VC funding in Ireland picked up in the second quarter last year, rising 38pc over the same period in 2023.
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