Dublin: Best Place In Europe To Raise VC?

Don't Miss Dublin Ask-A-Thon and Wu-Tang DublinGlobe.com

Dublin is the largest city on a small island of six million people on the periphery of Europe. And, while we can boast the Web Summit and the European HQs of many of the leading US technology companies, we do not have a reputation as a VC hotspot.

Time to change that. And here’s why.


(A) A startup is twice (2x) as likely to raise venture capital in Ireland than in the UK. Fact.

It is probably fair to say the UK (population 64 million) is the biggest player in Europe for VC investing. In 2014, $2.15 billion (lets say €2 billion) was invested by VCs into UK companies (per The Financial Times). €401 million was invested by VCs into Irish companies in the same period (per the Irish Venture Capital Association).

Yes, the UK has 5x times the level of VC investment as Ireland. But hold on: the UK has over 10x times the population of Ireland. So any company seeking VC investment and deciding between which of the two countries to base themselves in is more than twice as likely to raise it in Ireland than in the UK.

(B) Ireland does 1/8th of all the Seed Rounds in all of Europe. Seriously.

According to this Techcrunch article (using data compiled by BrightSun’s startup discovery tool) there were five hundred seed deals in Europe during the eight months to August 2014, of median value of ca. $300k. Extrapolating the number of deals would suggest 750 seed rounds in Europe during 2014. (NB: I was unable to verify if Ireland was included in the BrightSun numbers.)

One of the largest venture capital outfits in Europe is Enterprise Ireland – a state agency. Typically each year in Ireland, Enterprise Ireland participates in (but does not lead) over 100 seed venture rounds of equity investment – each round worth ca. €500k. Enterprise Ireland would usually invest no more than €150k of a €500k round. In 2014, 108 companies raised a seed round in which Enterprise Ireland participated.

If Ireland is represented in the overall BrightSun European numbers, then Ireland would be delivering about 1/7th of all the Seed venture deals in Europe (108/750). If Ireland was not represented in the numbers, then Ireland would still represent about 1/8th of all the seed venture deals in Europe (108/858).

(C) Ireland is producing quality Series A deal-flow.

Given that there is such a level of concentrated state support (with investment and initiatives, etc.) in Ireland for seed stage companies, the question is valid as to whether the quality of startup companies raising seed investment is, in fact, any good? To compare Seed and Series A Round activity, I used numbers from the IVCA and Enterprise Ireland’s numbers. For the purposes of this analysis, I am suggesting Series A would be any funding round between €1.5-6 million (up until this year, with exchange rates, etc., this would have been about $2-8 million).

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So – does Ireland have a comparable rate of seed funded companies, going on to raise a Series A round? The numbers suggest Ireland may have a conversion of seed to Series A approaching 32% – but how does it compare to the US? In the US – according to CB Insights – typically 39% of seed funded companies raise a follow-on round. Ireland has a Seed to Series A conversion rate of ca. 32% and the US has one of 39%. It appears from BrightSun’s European numbers that the overall European number would be about 20%.

Can we do the later than Series A stages? Of course we can! Here are some examples: Movidius ($84 million), Powervation ($40 million), Intercom ($31 million), AMCS ($26mln), Swrve ($21 million), Nualight ($17 million) – to name but a few!

Conclusion:

The Seed Round/Series A Round activity levels suggest the quality of seed and Series A funded startups being developed within the Irish ecosystem is approaching the level of US seed funded startups. I would suggest, at this point, that Dublin is one of the leaders for venture capital investment activity in Europe – relative to size of population/economy.

Most of Ireland’s start up and investment activity is focused out of Dublin, which is developing a thriving startup ecosystem. The guys with the money – the investors – are super accessible for any company seeking to raise it. Not only are they accessible, they are incredibly active. There are currently 27 active Seed/Series A venture capital funds looking to meet with companies who want to raise anywhere from €100k to €40 million.

So, if you know a new startup which could be based in Europe and needs venture capital to grow – tell them to get to Dublin fast.

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