Monday, May 20, 2024

Value of Irish venture capital deals fell 80% in Q1

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The value of venture capital deals fell 80% during the first three months of the year when compared to the same period last year.

According to the latest Venture Pulse report from KMPG, just $34.19m was invested by VCs between January and March in 17 deals.

That compares to $172.8m over the first quarter of 2023 in 24 deals.

The quarter’s largest deal was $7 million raised by Galway-based medtech firm Ceroflo.

“Despite a very slow start to the year, interest in Ireland’s technology companies remains reasonably positive, with opportunities for companies in the medtech, AI and cleantech areas in particular,” said Anna Scally, partner and head of technology and media at KPMG in Ireland.

Evidence of the interest in technology firms was seen in the closing of the acquisition by Softbank of a majority stake in Cubic Telecom for €473m.

But the challenging first quarter was not unique to Ireland.

Globally, VC investment also dropped markedly from $83.8bn across 9,548 deals in the final three months of last year to $75.9 billion across 7,520 deals in the first quarter of this year.

KPMG said geopolitical tensions, the extended drought in exits among VC-backed firms and a continued pullback in investment at later deal stages were all to blame.

In Europe, however, VC investment did increase during the period from $15.1 billion in the last three months of 2024 to $17.9 billion between January and March.

The number of deals fell from 2,419 to 1,798 though.

Heading into the second quarter, the analysis said Irish VC investors are expected to remain very cautious as they assess how ongoing macroeconomic challenges and geopolitical issues could unfold, including uncertainties related to upcoming elections in the US and Europe.

But given the increasing regulatory requirements, VC investment in cleantech and ESG reporting are set to remain strong.

“During this quarter, the European Parliament agreed to the text of the world’s first binding law on AI, the Artificial Intelligence Act. This Act aims to ensure safety and compliance with fundamental rights while encouraging innovation within the EU,” Ms Scally said.

“Once it becomes law, which could be as soon as the end of Q2’24, its impact will start to be felt within six months, with full implementation taking effect within 24 months. Companies will now have to factor the provisions of this Act into how they develop AI products and services to be rolled out in the European market.”

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