Irish venture capital investments plunge amid economic uncertainty

Irish venture capital investment plummeted in the second quarter as the tightening rate environment and economic uncertainty prompted a decline in deals.

his is according to the latest Venture Pulse report from KPMG which tracks global venture capital activity.

Following two years of strong venture capital investment fuelled by economic growth in Ireland, this type of investment fell in the second quarter of the year. Irish companies raised $207m (€203m) in venture capital in June over the period.

This marked a notable decline from the same quarter in 2021, which saw Irish companies receive $641.5m in such investment.

It was also a drop from the first quarter of the year when VC investment in Ireland stood at $401m.

The VC investment in Ireland in the second quarter was spread across 44 deals, the largest of which included Cork automation software developer Keevlar which received $24m.

Galway medtech company Vivasure Medical was close behind, receiving investment of $23m, while Cork employee engagement software firm Workvivo gained VC investment of $22m in the second quarter.

KPMG reported that 10 of these deals were in the $10-25m range, with none surpassing the $100m mark.

This downward trend was also reflected worldwide as global activity levels fell. VC investment decreased to $120bn in the second quarter of 2022, down from $165.3bn in the first quarter.

The number of deals also fell sharply from 11,468 in Q1 to 8,420 in Q2.

KPMG pointed to the rise in geopolitical tensions and economic uncertainty as the main factors driving the slowdown.

Changes in monetary policy also played a role in
the decline in the number of deals.

“As the world economy has continued to become more uncertain, we are now seeing higher levels of caution within the venture capital arena, particularly with regard to larger deals, not just in Ireland, but globally,” said KPMG fintech lead Anna Scally.

“Added to this is that during Q2 ’22, the European Central Bank also announced that it would be raising interest rates for the first time in 11 years”

Ms Scally added that investment is likely to remain “muted” for the remainder of the year .