• 28 venture capital (VC) deals closed in Ireland in Q3’22, worth $108.2 million.
  • Significant slowdown of VC activity as the third quarter slows to just over 52% of the previous quarter ($207m) 
  • Q3 saw no $100m+ deals in Ireland – largest deal was $62m raised by Fonoa, the Dublin-based developer of tax automation software
  • The Q3’22 edition of the Venture Pulse report produced by KPMG analyses the latest global trends in venture capital investment data and provides insights from both a global and regional perspective. All figures cited are in USD; data for the report is provided by PitchBook.

VC investment declined in Ireland and globally for the third quarter, according to the Q3'22 edition of Venture Pulse — a quarterly report published by KPMG. Irish companies raised $108.2 million in venture capital investment across 28 deals. This is a significant drop from the previous quarter (Q2’22), which saw Irish companies raising VC investment of $207 million.

Activity levels in Ireland follow the global trend, where the number of international VC deals plummets from $136.8 billion across 10,425 deals in Q2'22 to $87 billion across 7,817 deals in Q3'22, the lowest level since Q4'17.

Top deals in Ireland

This quarter’s largest deal was the $62m raised by Dublin-based developer of tax automation software, Fonoa. The next biggest deal by size was the $7.3m raised by Dublin-based developer of a client due diligence platform ID-Pal.

Commenting on VC activity in Ireland during Q3'22, Anna Scally, Partner and Fintech Lead at KPMG in Ireland, said: “Significant market volatility, ongoing geopolitical and economic turmoil – including fears of a recession – have led to a continued and significant cooling of global VC funding. While a number of sectors saw declining investment in Europe during Q3'22, VC investors continued to show strong interest in cybersecurity. Additionally, as we develop quantum computing and it becomes more accessible, the whole cybersecurity area will also ramp up. We'll see a lot more investment —not just in Europe - but everywhere as companies look to take cybersecurity to the next level."

“We see some positive and negative trends in the Irish VC market. There is still a reasonable number of companies managing to secure funds in the Irish market - 28 companies successfully did so in Q3.  However, there are indications that VC investment is going into more developed companies that have products/services ready for the market. That means less money is being invested into earlier-stage companies. We need investment in early-stage start-ups if we are to create the funnel of companies necessary to ensure that we have companies capable of scaling and competing globally. It is also critically important that we start to see the deployment of the €90 million Innovation Seed Fund Programme launched earlier this year.”

Other notable Irish deals include Xunison, the developer and provider of smart devices, which raised $3.45m; VRAI, the virtual reality company which raised $ 3.42m and Yonder, the health and pension benefits platform raised $2.69 million.

Time to evaluate

VC investors took more time to evaluate deals than in recent quarters, conducting additional due diligence and focusing on profitability and business model sustainability. As a result, VC investors flocked to the B2B space, particularly solutions focused on improving operational efficiencies and employee productivity. Energy, healthtech, and cybersecurity also showed resilience in the face of current market dynamics.

With no indication of when market conditions will improve, global VC investment is expected to remain subdued in Q4'22. While the strongest companies will continue to attract VC funding, down rounds will likely become more common, and some start-ups will fail to raise funds. M&A activity is expected to increase as some companies consider alternatives to IPO exits and start-ups unable to obtain additional financing look to sell.

Key global highlights – Q3’22

  • Global VC investment fell for the third straight quarter, from $136.8 billion in Q2’22 to $87 billion in Q3’22.
  • The number of global VC deals dropped from 10,425 in Q2’22 to 7,817 in Q3’22—the lowest level in almost five years.
  • The US accounted for $43 billon in VC investment in Q3’22, near half of global total.
  • VC investment across the Americas declined from $76.6 billion to $45.6 billion quarter-over-quarter.
  • VC investment in Asia dropped from $26.6 billion in Q2’22 to $21.7 billion in Q3’22.
  • Europe experienced a sharp drop in VC investment between Q2’22 and Q3’22, from $31 billion to $18.7 billion.
  • Global corporate-affiliated VC investment fell from $59 billion across 2,459 deals in Q2’22 to $40.5 billion across 1,810 deals in Q3’22.
  • VC-backed exit value increased from $86.6 billion in Q2’22 to $101.1 billion in Q3’22, driven by a large increase in exit value in Asia—from $51.6 billion in Q2’22 to $82 billion in Q3’22. Exit value in the US remained incredibly weak, with $14 billion in exits – the lowest level since Q4’16.

Get in touch

For further information on this edition of Venture Pulse, please contact Anna Scally, Head of Technology and Media and FinTech lead.

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