VCs Shun Newbies For Existing Investments

28 Oct 2020 | 08.11 am

VCs Shun Newbies For Existing Investments

KPMG Venture Pulse Q3 2020

28 Oct 2020 | 08.11 am

Venture capital investment in Irish companies declined in the third quarter, down by more than half from the €159m invested in Q3 2019.

The findings come in KPMG’s Venture Pulse Q3 2020 report, and show that there were just 24 deals in the quarter compared to 73 a year earlier. The total invested was €73m.

The top five deals closed, four of which were later stage VC and one which was early stage, were:

  1. iQuate ($15m) – Dublin-founded global leader in IT operations management, with offices worldwide.
  2. Kitman Labs ($11.5m) – Dublin sports tech company and provider of performance intelligence solutions to sports teams.
  3. BHSL Hydro ($9.7m) – Irish waste-to-energy company BHSL, founded by brothers Jack and Declan O’Connor in Co Limerick in 2009.
  4. MagGrow ($6.9m) – Dublin agritech business which develops crop protection technology and was founded in 2013 at NovaUCD.
  5. Deciphex ($6.2m) – Tech company using artificial intelligence to accelerate the delivery of pathology services.

KPMG fintech lead Anna Scally (pictured) commented: “It’s clear that private equity and venture capital firms are placing big bets on later stage companies, so the big concern is who is going to fund earlier stage companies, or are they going to be funded at all? 

“In Ireland we need to make funding programmes more accessible, because if early stage companies don’t receive funding, they will not be capable of securing follow-on investment down the road. That will have a big impact.

“The uncertainty created by the Covid crisis has had a significant impact on the number of companies that successfully secured investment in Q3. Investors are very focussed on supporting their existing portfolio companies, and I suspect many are reluctant to increase their exposure at this point. 

“There is a real risk that this continues to be the case through Q4 as the impact of the pandemic continues to be felt across the economy, although I’m hopeful that Q3 was a blip as Q4 has started off strong with investments in Ireland in companies such as LearnUpon, Neuromod and Wayflyer.”

Scally added that government would need to review existing initiatives like debt and equity funding programmes and tax incentives to ensure there is adequate support for early stage companies and to encourage more early stage investment by private investors. 

The full global Pulse report is available here.

 

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