Funding Crunch For Irish Startups

Sources of Funding

by Wicus Grobler

In a recently published news article in the Independent; Brian Caulfield, the new chairman of the Irish Venture Capital Association is quoted as saying “Irish tech startups are facing a financial crunch that is pushing some companies to set up operations in the UK to benefit from its more benign funding regime”.  This has prompted me to try and find out more about the IVCS and what they do.

So who is the IVCA and what do they do?
The Irish Venture Capital Association, is a company who represent venture capital in Ireland (both sides of the boarder).  The members of the IVCA can provided support to startups in the form of funding, or advisory services related to venture capital.  The members of the IVCA includes well known national and international companies, like KPMG, and Investec, and the Irish Government.

Working my way through there website, I started to realize that they don’t seem to directly work with startups.  The IVCA rather looks like a over-site body that helps venture capitalists invest in Irish startups, rather than helping Irish startups getting seed funding.  My perception on how the organization seems to work, is neither here nor there, as the events that the IVCA host or participate in allows for the interaction of investors and startups and SME’s to interact.  Two of the events that was listed for this year was the InterTradeIreland Venture Capital Conference 2015 and the VentureWest inaugural conference.

The IVCA also provides information on funding, and areas of funding.  IVCA VenturePulse survey First Part of 2015 is there publication on funding provided by members, to Irish companies.  The following quote from the above mentioned publication.

Regina Breheny commented, “These funds were raised almost exclusively by Irish venture capital fund managers who during this period supported the creation of up to 20,000 jobs; attracted over €900m of international capital into Ireland and geared up the State’s investment through the Seed & Venture Capital Programme by almost seven times.”

Looking at summary of the research, you actually see how little of the overall funds raised actually goes to Startups.
This data only compares the first half of the last 3 year.

2013 2014 2015
Funds Raised €164.9m €211.9m €306.9m
SEED/EARLY STAGE €34.2m €6.4m €19.4m
% of total funds 21% 3% 6%

Looking purely at the numbers for the first half of 2015, 94% of the money seems to be allocated to SME’s, and not startups.  That is a bigger problem.  Yes, SME requires similar support from investors, BUT do we really want to provide support for nearly established companies over start ups, its a question that I’m not qualified to answer.  From my viewpoint we need to provide more support for the startups, they are the future of a Irish SME’s.

A last quick note on one of there other publications IVCA-VenturePulse-Q1-Q3-2015 this publication provides more information of which supported organization receives money from which Investor.  The following is some of the issues I have with the information provided by the IVCA, the above report is used as an example.  The information seems to be a spreadsheet that was copied into a word document for publication.  The report is only contrasting this years data by period, and not by business sector.  This report is only provided for SME, and I could not find any related report for startups.

 

References

News Release Irish tech firms raised €307m in first half of 2015 – 45% ahead of last year – IVCA VenturePulse survey Dublin, Wednesday, 16 th September, 2015 [online] Available  http://www.ivca.ie/wp-content/uploads/2015/09/RS-VPulse-Q1Q2-2015-100915-BC.pdf [Accessed: 2015-11-23]
IVCA VenturePulse Q1-Q3 2015 Publication [online]  http://www.ivca.ie/wp-content/uploads/2015/11/IVCA-VenturePulse-Q1-Q3-2015-Publish.pdf [Accessed: 2015-11-23]

 

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