VC funding for tech start-ups slumps in Q1
A survey has shown that the amount of venture-capital funding secured by small and medium-sized Irish technology firms fell sharply in the first quarter (Q1) of this year.
The Irish Venture Capital Association (IVCA) VenturePulse survey, published in association with William Fry, showed that technology SMEs raised €221.7 million in the three-month period – down 58% compared with the same period last year.
“While funding fell across most deal sizes, the outcome must be seen in the context of an exceptionally strong start to last year, when Irish firms raised more than €500 million, which was a record for a first quarter,” commented IVCA chair Caroline Gaynor.
International investors accounted for 85% of the capital raised during the quarter.
‘Glass half-full’
Gaynor described the figures as “glass-half-full territory”.
“It once again highlights our exposure to overseas investment, but also emphasises the appetite for quality Irish tech firms, despite unprecedented spending on AI in the US,” she stated.
The IVCA cited recent figures from research firm Crunchbase, which showed that AI accounted for about 80% of the record $300 billion invested globally in start-ups during Q1 2026.
In Ireland, life sciences led the way in the quarter, accounting for 54% of the total, or €119.5 million, followed by fintech at 13% (€28 million) and software 12% (€26.9 million).
AI ‘embedded’
While AI represented just 2% of the total on a sector basis, IVCA director general Sarah-Jane Larkin said that this figure might be understating AI’s real footprint, as the survey classifies companies by their core industry, even where AI is now embedded in their products and services.
The IVCA figures showed that funding declined across all deal sizes except transactions of less than €1 million.
In the €3-5 million range, investment fell 77% to €7.9 million. Deals worth between €5 million and €10 million dropped by 62% to €16.5 million.
Geopolitical headwinds
On the impact of the Iran war, Larkin said that it was hard to predict, describing Ireland as “a small market subject to global geopolitical headwinds”.
She added, however, that local policy initiatives could mitigate the conflict’s effects to the benefit of early-stage Irish start-ups looking to raise funding this year.
Larkin pointed out that Enterprise Ireland had raised its direct investment limit from €250,000, adding that firms should also see the benefits of the Government’s €250 million Seed and Venture Capital Scheme 2025-29 start to feed through this year.