Venture capital investments in Ireland have experienced a significant decline of 17% compared to the previous year, particularly impacting the fintech sector, according to two reports released by accounting firm KPMG. The reports attribute the slowdown in investment in Ireland to factors such as increasing interest rates, high inflation, and geopolitical issues like the prolonged war in Ukraine. This trend is not unique to Ireland but is being observed globally.
Between April and June, Ireland closed 33 venture capital deals with a total value of $172.5 million (€158.4 million), marking a 17% decrease from the $207 million invested across 44 deals during the same period in 2022. Within the first six months of this year, nine deals involving fintech companies were closed, amounting to $59.22 million. Notably, Dublin-based unified payments company NomuPay raised $53 million during this period. Other significant fintech deals include Outmin, an automated accounting and bookkeeping platform, and Dimply, a developer of a customer interface for financial services providers, both of which raised over $2 million each.
However, during the same period in 2022, although only nine deals were closed, the combined value amounted to $742 million, largely due to a substantial investment of $676 million by J.P. Morgan in Cork-based Global Shares. Ian Nelson, head of financial services at KPMG, expressed optimism regarding the long-term prospects of various subsectors within fintech, particularly regtech, payments, insurtech, and wealthtech. He expects funding to rebound as market conditions stabilize, although it may not reach the record levels seen in 2021.
Outside of the fintech space, other notable deals made in Ireland this year include medical device company Neuromod raising $32 million and renewables-focused energy transmission company SuperNode raising $17 million.
Globally, venture capital investments have experienced a decline for the sixth consecutive quarter. In the first three months of this year, a total of 10,121 deals were closed, amounting to $86.2 billion. However, this figure dropped to 7,783 deals worth $77.4 billion between April and June. The funding in the fintech sector also witnessed a decline, with investments decreasing from $63.2 billion across 2,885 deals in the first six months of 2022 to $52.4 billion across 2,153 deals during the same period this year.
Anna Scally, head of technology and media in Ireland for KPMG, highlighted that venture capital investors previously benefited from lower interest rates. However, with rates now increasing, investors have more options, making it more challenging for funds to secure investment and for companies to secure venture capital funding. Despite these challenges, Scally emphasized that investors are still searching for innovative, valuable, and opportunistic businesses, and great companies will continue to secure funding.