‘These levels are flashing red warning signals’, says IVCA chairperson Richard Watson.
The Irish Venture Capital Association (IVCA) has raised concerns over the influence of international venture capital funding in Irish domestic companies, as foreign contributions represented 82pc of the total investment in Irish SMEs in the first half of 2026.
“These levels are flashing red warning signals as they represent some of the highest on record and emphasise our over-exposure to overseas investors,” said IVCA chairperson Richard Watson of the VenturePulse survey data published today (13 September).
Global geopolitical instability, including the war in Iran, as well as the significant concentration of US capital in blockbuster AI deals could well impact future international VC investment into Ireland, he said.
Turbulent geopolitical conditions caused a 71pc fall-off in international investment in Q4 last year, leading to a 46pc decline in total funding for the quarter, while contributing to a 23pc drop-off in funding for the year.
The “rollercoaster” year for funding was attributed to an “undoubted Trump effect”, after uncertainty caused by tariffs led to the worst second quarter for 10 years.
Meanwhile, VC funding of AI giants has dominated the global charts in recent years, led by Anthropic and OpenAI – two of the biggest private companies in the world that between them took 43pc of global start-up funding in the first half of 2026.
Smaller deals take a hit
Total venture capital funding into Irish SMEs fell 10pc to €578.4m in the first half of 2026, while the second quarter marked year-on-year growth of more than 200pc to €356.7m. That significant jump, however, is in comparison to the same period last year – which was the worst in 10 years.
Of the more than half-a-billion euros in funding raised by Irish SMEs in the first half of this year, deals of more than €30m grew by 3pc, while all funding brackets under €5m dropped. Comparatively, in the second quarter, deals crossing €30m grew by a considerable 570pc, while there were no deals in the €10m to €30m range.
Two companies – Dublin fintech provider Fonoa and Belfast cybersecurity firm Cloudsmith – accounted for nearly 44pc of the total raised in the second quarter, led majorly by American venture firms.
Other major rounds in Q2 included drone delivery company Manna, which raised €43m; fleet safety tech provider CameraMatics, which raised €49m; and AI space-tech Ubotica.
Smaller deals included women’s health-tech Peri’s €100,000 round and AI accessibility start-up Nexus Inclusion’s €1.5m raise.
The data highlights the “extent to which the dearth of domestic sources of funding is limiting capital formation”, said IVCA director-general Sarah-Jane Larkin.
Life sciences and fintech companies led the way in the first half of the year, both accounting for 26pc of total funding, followed by cybersecurity and software at 14pc each. Meanwhile, AI and machine learning represented 7pc.
“This does not mean we are being left behind in AI,” commented Larkin.
“It is unrealistic to expect a small nation like Ireland to produce the giant platform and frontier AI leaders of the US. But AI is now embedded in the products and services of the vast majority of local VC-backed SMEs.”
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Suhasini Srinivasaragavan is a sci-tech reporter for Silicon Republic
