Venture capital funding rose 41pc to €193m in the third quarter despite barriers thrown up by Covid-19 according to new figures from the Irish Venture Capital Association. It brings to €786m the amount raised by tech and biotech firms here so far in 2020, a 39pc jump on the same period in 2019. This puts the Irish tech sector on course to exceed €1bn in funding this year, representing an unexpected boost during the pandemic lockdown.

While other business sectors struggle, Irish tech companies are increasingly seeing cash investors ready to sign funding deals of over €5m. The IVCA figures, prepared in association with William Fry, saw a fivefold increase in deals of an order between €5m and €10m. That resulted in 11 deals worth €72m compared to €13.3m for the same period in 2019.

However, concern has been expressed for early stage companies, which are struggling to attract backers in the same numbers as established companies. “Deals in the €1m to €5m range fell by 20pc to €40.6m from €50.5m compared to the same quarter last year,” said Sarah-Jane Larkin, director general of the Irish Venture Capital Association. “In addition, seed funding did not increase in line with the market in general. Seed funding rose by 9pc in this quarter to €18.9m from €17.3m, compared to a 41pc increase overall.”

Ms Larkin also said that deals of less than €1m were down 7pc in this quarter to €11m from €11.8m. She said that deals in this sub-€1m category for the year to date dropped by 15pc to €32.3m from €38m. The IVCA report covers equity funds raised by Irish SMEs and other SMEs headquartered on the island of Ireland from a variety of investors.

Software accounted for 30pc, or €58.9m, in the third quarter followed by life sciences (16pc), fintech (15pc), ‘agtech’ (10pc), environmental (7pc) and ‘other’ (22pc). For the nine months to date, life sciences accounted for over a third (35pc) of total funding at €282m followed by software (€192m or 24pc) and fintech (€115m or 15pc).

“We may be seeing a continuation of the trend in the second quarter when VC firms looked to increase their investment in existing portfolio companies to overcome the threats caused by the pandemic and help them through the next 12-24 months,” said Gillian Buckley, chairperson of the Irish Venture Capital Association.

Irish Independent, 18 November 2020