Irish SMEs raise 35% more venture funding but fewer start-ups benefit

Irish small businesses raised 35 per cent more venture capital funding year-on-year in the nine months to September, but the percentage of funding going to start-ups fell considerably.

That’s according to a new survey by the Irish Venture Capital Association (IVCA) which revealed €314m was raised by SMEs in the period, compared to €233m in the same period in 2013 and €184.8m in 2012.

However, just five per cent of the total venture funding was distributed to ambitious start-ups. This is an alarming drop considering start-ups received 21 per cent of the total venture capital funding raised in 2013.

Regina Breheny, director general, IVCA, believes seed funds supported by the banking sector and Enterprise Ireland must be renewed if start-ups are to benefit with more funds.

“The seed funds are actually running out of money ... they would have a life of four to five years and most of them are now coming to the end of that life,” said Breheny.

“The issue will be how much money will be available and where it will come from at the end of the day.

“I think the banks have had a good experience so far, they do seem to be relatively comfortable with the expertise that the VCs (venture capital firms) have shown in terms of investing the money and they may well step up to the plate again.

“In the meantime of course the main VCs are fundraising so that kind of round needs to be got out of the way first and we’re fairly confident that will come to fruition.”

Enterprise Ireland has committed €99.5m to a host of venture capital funds as part of its ‘Seed and Venture Capital Scheme 2013-2018’. The organisation is currently assessing which businesses and sectors to target for the remainder of the scheme.

In addition, a total of €175m has been committed to the scheme by the Government.

Richard Bruton, Jobs Minister, believes the scheme “will help support the next generation of Irish-based seed and venture funds and increase the availability of funds ... to the fast-growing businesses that will create the jobs we need”.

Date published 10 Dec 2014 | Last updated 10 Dec 2014