Investments in startups surge to overtake pre-pandemic levels

The average amount invested in the first half of 2021 was €324,500

Halo Business Angel Network director John Phelan
Startups across the island of Ireland are now raising more money than they were pre-pandemic.  Angel investors injected €8.38m into 37 startups in the first half of 2021, 13.5pc up on the same period in 2019, according to the Halo Business Angel Network (HBAN), an umbrella group for early-stage investors.

John Phelan, HBAN’s all-island director, previously told the Irish Independent that he expects to make up the ground lost last year, when there was a €2m dip in investment compared with 2019.  He also said he hopes that pent-up pandemic savings will find their way to early-stage companies.

According to HBAN data, the average amount invested in the first half of 2021 was up by 29pc on 2019 levels, reaching €324,500, compared with €251,000 on average in 2019.  Startups have managed to leverage a total of €37.9m so far this year from sources outside HBAN, which is more than double the amount raised in 2019.

Individual angels invested an average of €44,000 each, although many also invested at the €25,000 range, a move HBAN is trying to encourage to make investing more accessible in future.  The bulk of HBAN funding – around 40-45pc – finds its way into IT firms, while close to 20pc goes to medtech companies.

Engineering and manufacturing firms got around 9pc of the total financing last year, while food and beverage companies saw an 8pc share, Mr Phelan has said.  Since HBAN was formed in 2007, startups north and south of the Border have raised a total of €400m in funding, from HBAN and other sources combined.

“We are delighted to report that angel investment is growing on the island of Ireland, despite the challenges that the Covid-19 pandemic continues to bring to businesses and investors,” said Mr Phelan.  “We have seen previously that times of crisis inspire a spirit of entrepreneurism and the first half of this year is testament to the quality of startups that are pitching to our angel investors.”

Mr Phelan said that changes to investment tax reliefs announced in Budget 2022 should remove some of the most frustrating obstacles to investors in early stage companies.

The Government has extended its Employment and Investment Incentive Scheme (EIIS), which allows relief of up to 40pc on shares bought in smaller companies, from four to seven years, and expanded it to include more investment funds.

The rise in angel investment mirrors trends in venture capital, which usually comes from larger or international investment funds.

According to the Irish Venture Capital Association, Irish firms raised a record €641m in capital in the first half of this year.  This is up 8pc on the same period in 2020.  Life sciences and software were the top two sectors attracting funding, making up more than 60pc of the total investments in the first half of this year.

A large majority of the money (70pc) came from US investment funds, according to IVCA chair Nicola McClafferty, who has said that it will be important to increase the supply of funding from Irish investors in future.

Source Irish Independent

 

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