Richard Watson, IVCA chairperson, said: “International investment as a percentage of the total reached 82 per cent for the first half and 80 per cent for the quarter. These levels are flashing red warning signals as they represent some of the highest on record and emphasise our over exposure to overseas investors.”

Mr Watson added that ongoing global geopolitical instability, including the Iran war, as well as US capital concentration in mega AI deals, could well impact future international VC investment into Ireland. “Just two frontier AI companies, Anthropic and OpenAI, sucked up 43 per cent or $217 bn (€188 bn) of global start-up funding in the first half.”

Sarah-Jane Larkin, director general, IVCA, said that all deal ranges in Ireland below €5m fell in the first half. “This and the lack of any deals in the €10-30m range in the second quarter highlight the extent to which the dearth of domestic sources of funding is limiting capital formation, even with the support of the Seed & Venture Capital Scheme.”

Deals between €3-€5m fell by 58 per cent to €21.5m from €50.7m in the same quarter last year. Seed funding, or first rounds by SMEs, fell 23 per cent to €50m.

Life sciences and fintech companies led the way in funding in the first half of the year in Ireland, both accounting for 26 per cent of the total; followed by cybersecurity and software (both 14 per cent).

AI and machine learning represented 7 per cent of the first half total. Ms Larkin commented: “This does not mean we are being left behind in AI. 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.”

Two companies, fintech provider Fonoa (€94.4m) and cybersecurity firm Cloudsmith (€61.5m) accounted for almost 44 per cent of the Irish second quarter total. Other major rounds in the quarter were SaaS provider CameraMatics (€49m) and drone delivery company Manna (€43m).