Venture capital investment in Ireland experienced a sharp decline in the third quarter of 2024, with the total value of deals plummeting 59% compared to the same period last year. According to data from KPMG Venture Pulse, only 28 deals amounting to $100.9 million were closed between July and September, reflecting a stark contrast to the previous year’s figures.
KPMG researchers attribute this downturn to a broader slowdown in global venture capital activity, which fell from a five-quarter high of $95.5 billion in the second quarter to a near seven-year low of $70 billion in the third quarter. Factors contributing to this decline include ongoing geopolitical conflicts, expected seasonal investment lulls, uncertainty surrounding U.S. politics ahead of the presidential election, and a continued drought of exits in the venture capital market.
“Following a strong Q2 2024, VC investment in Ireland saw a significant slowdown in Q3 2024, as both traditional and corporate VCs pulled back,” stated Anna Scally, EMA region head of technology and media at KPMG.
Despite these challenges, there is potential for revitalization in the venture capital landscape. The Irish government recently announced a new Seed and Venture Capital Scheme set to run from 2025 to 2029, which aims to inject a record $275 million into the ecosystem. This initiative, administered by Enterprise Ireland, is expected to provide essential funding for early-stage Irish companies.
“As VCs continue to seek opportunities to support scaling businesses, this initiative will be vital in fostering growth and innovation,” Scally added.
Among the notable deals in the third quarter, Galway-based medtech firm Luminate Medical secured the largest funding round of $15 million. Additionally, Loci Orthopaedics, also located in Galway, raised $13.8 million.
Scally highlighted that recent budget changes expanding Capital Gains Tax (CGT) relief for angel investors could further stimulate investment in start-ups. The reduced CGT rates of 16% (or 18% for partnerships) will apply to investment gains, and the lifetime limit for relief has increased from €3 million to €10 million.
“With the increased relief cap, investors should have greater motivation to inject capital into early-stage companies, helping them scale and, in turn, contribute to the Irish economy’s growth,” she explained. However, Scally also noted that some terms and conditions associated with the relief may need improvement in future budgets.
As Ireland navigates this challenging investment climate, the hope is that new initiatives and adjustments to tax relief will encourage a resurgence in venture capital activity in the coming years.