Con­cern as tech star­tups suf­fer VC fund­ing fall

Irish Independent - Business Week - - FRONT PAGE - Adrian Weck­ler

VEN­TURE cap­i­tal fund­ing has slumped in Ire­land with a fall-off in ma­jor deals and seed fund­ing, new fig­ures show.

In­vest­ment was down by al­most a third to €546m in the first nine months of the year, con­firm­ing a sig­nif­i­cant slow­down on 2017.

The drop-off in cash ac­cel­er­ated dur­ing the year, with the amount raised by tech firms and star­tups in the last three months just half what it was last year.

The fig­ures, col­lated by the Ir­ish Ven­ture Cap­i­tal As­so­ci­a­tion (IVCA) and William Fry, sug­gest that the largest seg­ment of fund­ing to see a de­cline is in deals above €5m.

These have fallen in value and vol­ume by around 30pc, ac­cord­ing to the IVCA re­port.

This year has not seen the same num­ber of head­line-grab­bing fund­ing deals as 2017, with the ex­cep­tion of the €110m round landed by Dublin-based In­ter­com.

But seed fund­ing, which helps star­tups, has also fallen com­pared to last year.

“Seed fund­ing ac­counted for 23pc of the to­tal funds raised in the third quar­ter,” said IVCA di­rec­tor gen­eral Sarah-Jane Larkin. “The de­cline in seed fund­ing is be­ing driven by the vol­ume of deals, which is down 32pc.”

Ms Larkin said that in­ter­na­tional in­vestors ac­counted for €300m (58pc) of the ven­ture cap­i­tal cash raised in the first nine months of 2018.

Ir­ish ven­ture cap­i­tal firms have re­cently com­plained about rules that limit their abil­ity to raise money from in­sti­tu­tional funds.

A num­ber of in­vestors and busi­ness own­ers have also be­gun lob­by­ing for greater tax breaks aimed at tech en­trepreneurs and their staff in Ire­land, claim­ing that lower UK tax rates now make it less at­trac­tive to start a busi­ness in Ire­land.

“The third quar­ter con­firms our ear­lier fears of a sig­nif­i­cant slow­down in the mar­ket this year,” said IVCA chair­man Alex Hobbs.

“We know that the Govern­ment is con­sid­er­ing ini­tia­tives to mo­bilise cap­i­tal to this sec­tor. These fig­ures il­lus­trate that we ur­gently need to see a mean­ing­ful re­sponse and ac­tion to ad­dress this.”

The re­ver­sal comes just as ven­ture cap­i­tal fund­ing had ex­ceeded €1bn in Ire­land for the first time.

“This is of par­tic­u­lar con­cern at a time of global eco­nomic uncer­tainty when we need to be do­ing all we can to boost our indige­nous tech­nol­ogy sec­tor for the fu­ture,” said Mr Hobbs.

“The gap is widen­ing be­tween coun­tries’ in­vest­ment ac­tiv­i­ties, and now is not the time for Ire­land to fall be­hind.”

The IVCA’s Sarah-Jane Larkin said the de­cline was driven by a drop in vol­ume

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