Irish venture capital investment slides 80% in first quarter amid global slump

Venture capital (VC) investment in Irish companies slid by 80 per cent to $34.1 million (€32.9m) in the first quarter of the year from the same period in 2023 as deal-making involving early-stage companies plunged globally to lows not seen in almost five years.

The total number of Irish VC deals declined to 17 from 24 year-on-year, according figures compiled by KPMG.

Global investment fell to the lowest level in nearly five years, to $75.9 billion across 7,520 deals from $85.8 billion spread across 9,458 transactions amid geopolitical tensions, an extended drought in VC firms being able to sell on exiting investments, and a continued pullback in investment in later development finance stages.

Market expectations for when the US Federal Reserve will start to cut rates, following a series of hikes in recent years, have been pushed out in recent months amid relatively hot inflation figures. Debt traders are currently putting the odds of a September decrease at 50:50.

Meanwhile, ongoing tensions in the Middle East and upcoming elections on both sides of the Atlantic later this year are keeping VC firms on the sidelines, according to observers.

“Despite a very slow start to the year interest in Ireland’s technology companies remains reasonably positive, with opportunities for companies in the medtech, AI and cleantech areas in particular,” said Anna Scally, a partner and head of technology and media at KPMG in Ireland.

A diverse range of start-ups attracted VC funding in Ireland during the first quarter, although at relatively small deal sizes.

The largest transaction in the sector was $7 million raised by Galway-based medtech firm Ceroflo. The investment round will develop a novel technology for the treatment for intracranial atherosclerotic disease, a leading cause of stroke.

The next three biggest deals by size involved Dublin-based companies. OOHPod, a smart parcel locker service, raised $5.9 million; MOBY Bikes, a bike sharing start-up, attracted $3 million in equity funding; and medtech company Coroflo brought in a similar amount in equity funding as it prepares for production of its breastfeeding monitor this year.

Looking ahead VC investors are expected to remain very cautious as they assess how ongoing macroeconomic challenges and geopolitical issues could unfold, according to KPMG.

Given the increasing regulatory requirements, VC investment in cleantech and environmental, social and governance (ESG) reporting is expected to remain strong. Investments in medtech AI and GenAI are also expected to continue.