Irish start-up review shows investments dropped 35% in 2023 - here's why

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Funding into Irish startups dropped to €847 million, down from €1.6 billion in 2021 and €1.3 billion in 2022. 

"This is disappointing, but it largely reflects broader trends as global start-up fundraising dropped 38% last year. The drop in funding was mainly due to a decrease in later stage rounds, which rely more on foreign investors," a TechIreland press release said.

"On the positive side, a record 403 tech companies on the island were funded, a 44% increase in the number of deals – a good indicator of the health of our ecosystem. The increase in the number of rounds was due to the large number of early stage investments. Seed to Series A rounds held up, with an increase in €1 million to €5 million deals," it added.

Meanwhile, the report stated that growth capital in global markets is more expensive. 

"In TechIreland's recent Pulse Survey, Irish tech companies said valuations have dropped and this was their top challenge. Last year, the number of deals over €5 million dropped to 28 from 48 the previous year, and the total value of investments also fell 45%."

The report higlighted that the top 10 Investments comprised less than 45% of the total, a big reduction on previous years. Cork based Everseen raised €65m, followed by Belfast based Weev and Dublin's Ocuco each raising €60m. Four companies from outside Dublin feature on the top 10, which include Tipperary's Shorla Oncology (€32m) and Galway based Vivasure Medical (€30m).

"In 2023, for the first time - Cleantech Investments topped the sector table surpassing HealthTech, FinTech and Enterprise Solutions, which are traditionally the top sectors in Ireland. While it is encouraging to see an increase in money flow to renewable energy, the downside as the more than 50% drop in funding for HealthTech, FinTech and Enterprise which make up more than 60% of all tech companies on the island," TechIreland said.

Meanwhile, it noted that regions outside of Dublin accounted for less than 30% of the funding raised, a drop on previous years. While the number of start-ups increased from 127 to 147 last year, the total raised fell to €222m from €502 raised the previous year. 

In response, TechIreland's chief executive, John O'Dea, said: "The Irish start-up ecosystem has great supports for early stage tech. Significant work is being done by Enterprise Ireland, LEOs, NDRC and HBAN to build a strong pipeline. But we also need to focus on developing home-growth funds that can support larger scaling companies."

Orla Browne of Dealroom said that Ireland's fall in VC funding has been largely in line with overall European levels - a fall of just under 50% between peak in 2021 and 2023.