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Tech Companies Are Finding Funding Success In Ireland

By May 2022June 3rd, 2022No Comments
Tech company funding successes 2022 - Beyond Accounting

Ireland has been attracting tech companies since as early as the 1950s, when IBM and Ericsson first arrived here. Since then, there has been a steady ingress of multinational tech corporations – eBay, Google, MasterCard, Dell, Oracle, Microsoft, and Intel to name just a few.

Above: a simplified timeline of top software engineering companies setting up in Ireland

As well as rolling out the red carpet for global tech giants, the government is focused on nurturing indigenous technology companies and ensuring they have the perfect environment in which to flourish.

Ireland is a great place to scale a business. Favourable tax conditions, easy access to Europe, a skilled workforce, and an established innovation infrastructure are just some of the reasons ambitious tech companies make Ireland their home. Another reason is funding. The latest funding review from Tech Ireland – the independent non-profit dedicated to promoting the Irish tech sector – reports that €1.6 billion was raised by tech businesses in Ireland in 2021.

A lot of supports and funding come through Enterprise Ireland, but not all by any means. Angel investors are becoming more active here, and equity crowdfunding is becoming more mainstream. Some companies have been successful in self-funding. But even though funding figures are up considerably (they’ve doubled since 2017), Ireland still underperforms when compared to Europe generally.

Innovation island

Although both sides of the border boast vibrant and innovative tech communities, they are still small by international standards. Recent plans to improve the island’s clout include:

  • The Shared Island Fund, with €500 million over four years in capital funding for collaborative north-south projects.
  • The FinTech Corridor, along the M1 Dublin-Belfast motorway. The hope is to create a world-class FinTech cluster that includes indigenous companies, multinationals, and support agencies.
  • Funding and supports through InterTradeIreland, the cross-border body funded by the Department of Enterprise, Trade and Employment (DETE) and the Department for the Economy (DFE) in Northern Ireland.

The winners and losers of tech funding in 2021

Ireland’s reputation in the HealthTech sector is well-founded, as this group attracted the most funding in 2021. 74 companies raised a total €623 million. Enterprise solutions is the largest sector in terms of number of companies, with 84 companies raising €363 million. FinTech is next, with 29 fintech companies raising €265 million (significantly higher than in 2020, when the sector raised a combined €186 million). Unsurprisingly, the ecommerce sector also saw a big increase in funding – 36 companies raised €100 million in 2021, up from €33 million in 2020.

Less successful in raising funding during 2021 were the CleanTech, Travel, Education, TelecomTech, and MediaTech sectors. 

Where did tech funding in 2021 come from?

Venture capital is the dominant source of funding in the Irish tech sector, accounting for more than 95% of the total funds raised in 2021. Bank loans are also cited as a funding source for tech companies, although anecdotally we know that SMEs have a mixed experience raising capital through traditional banks.

What’s really interesting about the 2021 data is the movement in funding brackets. There is clearly big ambition in these funding rounds, with 12 companies raising more than €30 million each, for a total of €827 million. Here’s a breakdown of the highest rounds:

source: TechIreland

For scaling tech companies looking at the funding landscape this year, 2022, keep an eye on the following opportunities:

European Union funding and loans

There’s a good database of available loans and venture capital supported by the European Union on the Europa website. You can modify your search by location, business size, investment focus, etc.

Irish Innovation Seed Fund Programme

This new €90 million fund for Irish start-ups was announced in February 2022. The programme will be led by Enterprise Ireland, with the European Investment Fund acting as fund manager. It is structured as a fund of funds and is particularly focused on promoting companies working in life sciences, healthcare, and pharma, as well as those working to reduce our reliance on fossil fuels.

By investing in several underlying venture funds, the Irish Innovation Seed Fund Programme will provide vital capital to innovative Irish companies at the crucial seed stage and will be an important step in developing and growing the Irish equity ecosystem.

gov.ie

Halo Business Angel Network (HBAN)

HBAN is Ireland’s largest network of business angels and syndicates and has been helping startups access funding for growth since 2007. There are 15 different angel groups, including 10 syndicates and 5 regional networks in operation across the island of Ireland.

HBAN reported 71 deals across the island of Ireland in 2021, with an angel investment of €18.2 million. The angel investments in turn leveraged funds of €100.2 million from other investors. Overall, HBAN investors have now invested over €140 million of private capital into 650 deals and these deals alone have leveraged a further €340 million, amounting to a total investment of €480 million on the island of Ireland.

HBAN provides entrepreneurs and start-ups the opportunity to present their businesses to pre-screened, high-net-worth individuals and syndicates who not only have the capital capacity to invest up to €250,000+ per investment, but also have extensive business acumen and industry experience which can help accelerate the growth of the startup. They can also provide pitch-ready preparation to all presenting companies to ensure that they make the best possible impression on investors.

Venture capital organisations

The Irish Venture Capital Association (IVCA) is the representative body for venture capital and private equity firms on the island of Ireland. InterTradeIreland and the IVCA jointly publish a guide to equity funding that lists nearly 40 venture capital organisations, with contact details, fund size, sectors invested in, investment range, etc.

Equity Crowdfunding

Spark Crowdfunding is currently the only equity crowdfunding platform in Ireland. Unlike the P2P lending platforms, this model means the company gives away shares instead of repaying the funding raised. Equity crowdfunding is still relatively new concept in Ireland and is still not regulated (although this is under review by the Irish Department of Finance).

Spark Crowdfunding doesn’t give investment advice to the companies or investors on the platform and doesn’t invest in companies itself. There are over 9,000 accredited private investors registered on the site to access investment opportunities, and the typical individual investment is on average €2,500.

One of the benefits of the platform is the speed at which funding can be raised, with a campaign typically taking just five weeks. It’s relatively easy to set up a campaign and fees are 7% of the funds raised. Spark Crowdfunding says there are usually three or four active campaigns on the site at any time. 24 of the 27 businesses that raised funds on Spark Crowdfunding since 2019 have also secured funding from Enterprise Ireland.

Seedcorn – InterTradeIreland

The Seedcorn Investor Readiness Competition is the perfect chance to get ‘investor ready’. The Seedcorn contest mirrors the real-life investment process. Participants, who are in with a chance to win a share of a €300,000 cash prize fund, can secure expert feedback on their business plans and pitches, improve their investor readiness, and gain exposure to investors, all while boosting their company’s profile.

Regional finalists since the competition began in 2003 have shared €5.5 million in prize money and gone on to raise over €276 million in equity funding.

Equity Advisory Service – InterTradeIreland

InterTradeIreland’s Equity Advisor can give one-to-one advice to early-stage high-growth ventures that intend to raise funds in the next 12 months. They also act as a sounding board for your management team before you approach the investment community to seek capital. To be eligible for this service, you must have a minimum new equity funding requirement of at least €100,000.

Enterprise Ireland

Enterprise Ireland partners with venture capital funds to provide finance to scaleups. The 2013 – 2018 Seed and Venture Capital Scheme was launched to improve access to finance for small and medium-sized enterprises and to further develop the seed and venture capital sector in Ireland. Over €700 million of EI funding is under management in SVC funds.

Enterprise Ireland can assist companies that wish to raise venture capital funding to grow their businesses. Enterprise Ireland does not act as a broker but can assist companies with contact details and specific areas of interest for the major Irish venture capital companies. In addition, Enterprise Ireland can assist you with introductions to these specific venture capital funds.

Make Ireland the place to grow your tech company

Ireland consistently attracts high-value tech projects. It has a skilled and motivated workforce, connected R&D community, and is an easy and tax-efficient country to do business in. It’s really no surprise that software engineering firms continue to thrive here.

Interested in reading the full Funding Review from TechIreland? Open the PDF in a new tab.

We regularly help clients to prepare the relevant documents and plans needed for funding and grant applications. If you’re thinking of switching to a proactive accounting firm that can give you additional support in these kinds of areas, get in touch today.
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