Venture capital funding for Irish small and medium-sized enterprises (SMEs) fell sharply by 58% to €221.7 million in the first quarter of 2026, according to the Irish Venture Capital Association (IVCA) VenturePulse report. The decline comes after a record-breaking Q1 2025, when Irish firms raised €532.8 million, highlighting a significant year-on-year correction in investment activity.
Despite the overall downturn, investment remained concentrated in key high-growth sectors. Life sciences led the market, accounting for 54% of total funding, or €119.5 million. Fintech followed with 13% (€28 million), while software attracted 12% (€26.9 million). Cybersecurity and environmental technology accounted for 9% and 8% respectively, reflecting continued investor interest in deep tech and sustainability-driven industries.
The report noted that artificial intelligence investment remains difficult to isolate due to classification methods, but estimated that AI accounted for just 2% of total funding in Ireland during the quarter. This contrasts sharply with global trends, where AI reportedly represented around 80% of the record $300 billion invested in startups in Q1 2026.
Several notable funding rounds helped support overall activity despite the decline. These included Neurent Medical, which raised €62.5 million, biotech firm Aerska with $39 million, encryption startup Evervault with €25 million, fintech company Circit with €20 million, and environmental technology firm XFuel with €18.5 million.
The report also highlighted a shift in deal size distribution, with funding declines across most investment brackets. Deals between €3 million and €5 million fell 77%, while those in the €5 million to €10 million range dropped 62%. Smaller deals under €1 million also declined, continuing a downward trend seen in previous quarters.
International investors played a dominant role in the market, accounting for 85% of total capital raised during the quarter. Analysts described this as both a strength and a vulnerability, reflecting Ireland’s dependence on overseas capital and exposure to global economic and geopolitical conditions.
Industry leaders warned that external factors such as geopolitical tensions and global uncertainty could further influence investor confidence in the coming quarters. However, they also pointed to potential stabilizing measures, including increased domestic investment support from Enterprise Ireland and the government’s €250 million Seed and Venture Capital Scheme for 2025–2029, which is expected to improve early-stage startup funding conditions over time.
Overall, the data reflects a cooling venture capital environment in Ireland, even as strong international interest continues in select high-potential sectors such as life sciences, fintech, and cybersecurity.
