Venture capital funding into small and medium-sized businesses fell during 2025 for the first time since 2018 as concerns over tariffs and investors focus on US AI projects impacted Irish firms, a new report from the Irish Venture Capital Association (IVCA) has found.
According to the VenturePulse report, published in association with law firm William Fry, venture capital funding in 2025 was down by 23% to €1.1bn. Funding during the last three months of the year saw an even more significant drop off, falling by 46% to €291.4m.
Chairperson of the IVCA Caroline Gaynor said it has been a “rollercoaster year” for Irish SMEs looking to raise capital with uncertainty coming out of the US, and in particular US president Donald Trump’s imposition of tariffs, leading to the worst second quarter for ten years.
During the fourth quarter the value of larger deals – valued at €30m or more – fell by 69% to €111m. Over the course of the year, the decline in overseas funding resulted in a 33% decline in this category to €540.8m.
Between October and December, deals valued in the €10m to €30m range for the year overall fell by 14% to €269.4m.
The IVCA data suggests that transactions for smaller rounds held up reasonably well in 2025. Funding in the €3m to €5m category rose by 39% to €113.8m.
There was a small decline (3%) in the €1 to €3m range to €102.2m. Seed funding, or first rounds raised by SMEs, dropped by 5% to €141m.
186 deals were completed in 2025, down from 217 the previous year, a fall of 14%.
“In addition, the fourth quarter saw a 71% retreat from the Irish market by international investors from €470m to €132.4m. This may be due to hesitation and uncertainty by US venture capital firms due to a number of factors including an ‘America first’ focus, negativity from across the Atlantic about Europe, and the impact of a weakening dollar,” Ms Gaynor said.
Director General of the IVCA Sarah-Jane Larkin said another reason for the decrease in international funding may be that US investors could be “overly focused on local AI opportunities” and “certainly the amount of money being invested there is sucking up a lot of venture capital”.
“Unicorn status is being achieved by early stage start-ups in generative AI in the US much quicker than in the past.” The top five deals during the last three months of the year included €30m raised by quantum computing company Equal 1, €25m raised by specialty pharmaceuticals company Shorla, €17m raised by biotech firm Aerska, €15m raised by smart kitchen platform Fresco, and €14m by healthcare technology firm Luminate Medical.
Life science companies attracted most funding in 2025 in Ireland, raising €461m or 40% of the total. This was followed by software with €156m; cybersecurity with €136m; AI and machine learning with €104m and fintech with €96m.
Despite these headwinds, Ms Gaynor said she remains positive about Irish entrepreneurs looking to raise capital in 2026.
“The Government’s Seed and Venture Capital Scheme 2025-291 has a record allocation of €250m and we should see the benefits kicking in shortly. In addition, progress is being made on the Government’s important enterprise scaling fund2 as well as other policy measures to mobilise capital to Irish SMEs,” she said.
“Current geopolitical events have highlighted the need for us to be more self-reliant, have more access to local capital and not be dependent on overseas investors to fund our indigenous tech sectors.” The data covers equity funds raised by Irish SMEs and other SMEs headquartered on the island of Ireland from a wide variety of investors. The research is the result of the latest detailed information supplied internally by members of the IVCA and from published information where IVCA members were not involved.
