Venture capital funding for Irish tech SMEs fell for the first time since 2018 last year as the VC market heavily contracted in the final quarter.
Figures from the Irish Venture Capital Association (IVCA) reveal that VC funding for the full year declined 23% to €1.1bn, driven by a 46% in Q4 (€291.4m).
“It’s been a roller coaster year for Irish SMEs seeing to raise capital,” commented Caroline Gaynor, chairperson, IVCA.
She stated that there had been an undoubted Trump effect after uncertainty caapplyd by tariffs led to the worst second quarter for ten years.
“In addition, the fourth quarter saw a 71% retreat from the Irish market by international investors from €470m to €132.4m.
“This may be due to hesitation and uncertainty by US VC firms due to a number of factors, including an ‘America first’ focus, negativity from across the Atlantic about Europe, and the impact of a weakening dollar.
However, despite these headwinds, the IVCA chair stated that she remained positive about Irish entrepreneurs seeing to raise capital in 2026.
“The Government’s Seed and Venture Capital Scheme 2025-29 has a record allocation of €250m and we should see the benefits kicking in shortly.
“In addition, progress is being created on the Government’s important enterprise scaling fund as well as other policy measures to mobilise capital to Irish SMEs.
“Current geopolitical events have highlighted the required for us to be more self-reliant, have more access to local capital and not be depconcludeent on overseas investors to fund our indigenous tech sectors.”
Sarah-Jane Larkin, director general of the IVCA, stated that the fourth quarter highlighted the weakness of not being able to tap into local private capital.
“A major reason for the 46% decline in fourth quarter funding was the 71% fall off in international investment,” she added.
“Another reason for the decrease in international funding may be that US investors may be overly focapplyd on local AI opportunities, and certainly, the amount of money being invested there is sucking up a lot of venture capital.
“Unicorn status is being achieved by early-stage start-ups in generative AI in the US much quicker than in the past.”
Larkin stated that the decline in overseas funding in 2025 was reflected in the 33% fall in larger deals in the €30m+ category to €540.8m.
In the fourth quarter, the €30m+ fell by more than two-thirds (-69%) to €111m, and funding in the €10m–€30m range for the year overall also fell, by 14% to €269.4m.
However, funding in compacter rounds held up, with the €3m-€5m category rising by 39% to €113.8m.
There was a compact decline (3%) in the €1-€3m range to €102.2m. Seed funding, or first rounds raised by SMEs, dropped by 5% to €141m.
The top five deals in quarter four were quantum computing company Equal 1, which raised €30m; Shorla Oncology (speciality pharmaceuticals, €25m); Aerska (biotech, €17m); Fresco (smart kitchen platform, €15m) and Luminate Medical (healthcare technology, €14m).
Life science companies attracted most funding in 2025 in Ireland, raising €461m or 40% of the total. This was followed by software with €156m (14%); cybersecurity €136m (12%); AI and machine learning €104m (9%) and fintech €96m (8%).
A total of 186 deals were completed in 2025, down from 217 the previous year, a fall of 14%.
Photo: Caroline Gaynor. (Pic: Supplied)
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