Irish Startups Face Funding Challenges Amid Global Economic Slowdown
According to Tech Ireland’s latest Startup Funding Review, the level of funding into Irish startups dropped to €1.3bn in 2022, compared to €1.6bn in the previous year. The report suggests that the drop in funding may be a signal of difficult times to come for early-stage companies, as they battle a challenging economic environment.
Global venture capital was down 30% last year compared to 2021, 20% in Europe, and 2023 is showing more of the same. Yoram Wijngaarde, CEO of Dealroom, which is a global database to identify and track promising companies, warns that as global investment eases, Irish tech funding could be at risk. In the past, Ireland has been successful at attracting high levels of overseas investment. However, Irish and other European startups seemed to have weathered the economic storm better than some of their US counterparts.
US venture capital investment in the second half of last year plunged 54% compared to the same period a year earlier. During the same time, investment into European startups was down 25% compared to 2021. The report suggests that the global economic slowdown is having an impact on the funding landscape for startups.
The top 10 investments made last year accounted for more than half of the overall funding. These included €226m into Irish fintech unicorn Wayflyer, followed by €87.2m into unicorn in the food ordering space Flipdish and €66m into payments tracking company TransferMate Global Payments. It is worth noting that for the first time, four companies from outside Dublin feature on the top 10 investment list, including Cork supply chain firm Keelvar.
Women-led firms recorded a marginally higher increase in investment compared to 2021 as 72 firms raised €234m last year, up from €230m in 2021. This is up from €105m raised in 2020. However, funding into women-led startups continues to fall behind startups led by men. The report suggests that more needs to be done to address this issue.
Last year was a disappointing one for tech startups in the North as funding appears to have decreased substantially from €80m in 2021 to €50m. As in previous years, Belfast dominates with over 95% of the funding. The report suggests that more needs to be done to support startups in the North and encourage investment in the region.
Overall, the report highlights the challenges faced by startups in the current economic climate. While Irish startups have been successful in attracting investment in the past, the global economic slowdown is having an impact on the funding landscape. The report suggests that more needs to be done to support startups, particularly those led by women and those based in the North.