Venture capital investment into Irish SMEs dropped to its lowest level in ten years in the second quarter of 2025, according to the latest Irish Venture Capital Association (IVCA) VenturePulse survey, published in association with William Fry LLP.
Funding in Q2 fell to €112.6 million, a dramatic decline from €494 million in the same quarter last year. This marks the lowest quarterly figure recorded by the IVCA since Q2 2015.
Despite a strong start to the year, with Q1 2025 reaching a record €532.8 million, the sharp Q2 drop brought H1 2025 totals to €645.5 million, down 14% from €752.7 million in H1 2024.
IVCA Chairperson Caroline Gaynor attributed the downturn to a significant 81% fall in international investment, which dropped to €69.5 million in Q2 from €375.3 million the previous year. "This is a timely warning sign for Ireland and highlights the need for us to stand on our own feet in terms of funding and backing for our brightest and best indigenous start-ups, instead of depending on volatile international support," she said.
Sarah-Jane Larkin, Director General of the IVCA, noted that bearish international sentiment was reflected in deal sizes. Only one deal exceeded €30 million (NomuPay), compared to five in Q2 2024. Funding in this category fell by 88% to €37 million. Similarly, deals in the €10m+ range dropped from six to one (Kota), with funding down 87% to €12.4 million.
"There was a falloff in all deal sizes, with the exception of those under €1 million," Larkin added. Seed funding fell by more than half to €25.5 million, underscoring the challenges faced by early-stage companies.
She welcomed the recent DETE report which found "a need for future government intervention to improve the supply of scaling finance," saying the new data "emphasises the urgency of the situation."
The life sciences sector led H1 2025 funding with €255.3 million (40%), followed by cybersecurity (18%), fintech (14%), software (9%), and AI & machine learning (8%).
Mark Quealy, Corporate and M&A Partner at William Fry, commented, "the latest IVCA VenturePulse results reflect a marked shift in investor sentiment, particularly among international backers. While the record-breaking Q1 was very positive (particularly in the context of the international funding landscape at that time), the Q2 figures are a reminder of the volatility inherent in venture funding markets. The sharp decline in deal volume and size, especially in the €10m+ category, signals a tightening in the availability of expansion capital for venture-backed businesses. At William Fry, we continue to support Ireland's most innovative SMEs and advocate for a funding ecosystem that enables long-term growth and resilience."
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
