Key Takeaways
- • Irish tech SMEs raised €113.8m in Q3, down 45% from €207.9m a year earlier, the weakest third quarter in 10 years according to the Irish Venture Capital & Private Equity Association (IVCA).
- • International VC funding plunged 76% to €35.5m from €146.7m, which IVCA chair Richard Watson attributed to a retreat by global investors and Ireland's over-reliance on overseas capital.
- • Deals in the €1m-€5m range fell to 12 from 30 a year earlier, with €1m-€3m funding down 70% to €10.7m and €3m-€5m rounds down 55% to €15.7m.
- • Nine-month funding shows life sciences leading at €163.2m (24%) and fintech at €154.2m (22%), while the €3m-€5m band fell 56% to €37.2m year to date.
- • Watson said VCs are struggling to secure matching funds from domestic institutional investors, including pension funds, needed to draw Enterprise Ireland Seed & Venture Capital Scheme money.
Summary
Irish venture capital funding fell sharply in the third quarter of 2026, with tech SMEs raising €113.8m, a 45% decline from €207.9m a year earlier, according to the Irish Venture Capital & Private Equity Association (IVCA), whose data was published in association with William Fry. The IVCA described it as the worst third quarter for Irish tech SME venture funding in 10 years.
The IVCA attributed much of the decline to an overreliance on international investors. Funding from international VC firms plummeted 76% to €35.5m from €146.7m in the same quarter last year. IVCA chair Richard Watson cited a retreat by global investors at a time when most global venture funding is concentrated in a small number of AI companies. "We have been warning for some time about our overdependence on international investors," Watson said.
The squeeze was most acute for companies seeking €1m-€5m. The number of such deals fell by more than half to 12 from 30, while €1m-€3m rounds dropped 70% to €10.7m and €3m-€5m rounds fell 55% to €15.7m. Watson noted that the number of deals across the first nine months was broadly stable at 129 versus 136 last year, but the mix had shifted toward very small rounds, with no deals above €30m in the quarter. Sarah-Jane Larkin, IVCA director general, said the nine-month figures showed the same strain, with €3m-€5m funding down 56% to €37.2m and €1m-€3m funding down 36% to €48.7m.
Watson said many Irish VC firms are working to launch new funds backed by the Government's Enterprise Ireland Seed & Venture Capital Scheme, but are finding it difficult to secure sufficient matching capital from private sources such as institutional investors, including pension funds. He added that Ireland was partly insulated from the recent volatility in AI company valuations following the US midterm elections, as it lacks large domestic frontier platform companies investing heavily in AI infrastructure such as data centres.
By sector, life sciences led nine-month funding at €163.2m, or 24% of the total, followed by fintech at €154.2m (22%), software at €110.6m (16%) and cybersecurity at €91.4m (13%).
The IVCA attributed much of the decline to an overreliance on international investors. Funding from international VC firms plummeted 76% to €35.5m from €146.7m in the same quarter last year. IVCA chair Richard Watson cited a retreat by global investors at a time when most global venture funding is concentrated in a small number of AI companies. "We have been warning for some time about our overdependence on international investors," Watson said.
The squeeze was most acute for companies seeking €1m-€5m. The number of such deals fell by more than half to 12 from 30, while €1m-€3m rounds dropped 70% to €10.7m and €3m-€5m rounds fell 55% to €15.7m. Watson noted that the number of deals across the first nine months was broadly stable at 129 versus 136 last year, but the mix had shifted toward very small rounds, with no deals above €30m in the quarter. Sarah-Jane Larkin, IVCA director general, said the nine-month figures showed the same strain, with €3m-€5m funding down 56% to €37.2m and €1m-€3m funding down 36% to €48.7m.
Watson said many Irish VC firms are working to launch new funds backed by the Government's Enterprise Ireland Seed & Venture Capital Scheme, but are finding it difficult to secure sufficient matching capital from private sources such as institutional investors, including pension funds. He added that Ireland was partly insulated from the recent volatility in AI company valuations following the US midterm elections, as it lacks large domestic frontier platform companies investing heavily in AI infrastructure such as data centres.
By sector, life sciences led nine-month funding at €163.2m, or 24% of the total, followed by fintech at €154.2m (22%), software at €110.6m (16%) and cybersecurity at €91.4m (13%).
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