THE flurry of venture capital deals announced by Northern Ireland companies over the past couple of years has made it easy to forget that less than a decade ago there was next to no VC activity in the region.
Catalyst’s most recent DealTracker report recorded £139 million of venture capital invested across 89 deals in locally based innovation and growth stage companies in 2022. As recently as 2014, that number was just £5m.
There are several contributing factors to this rapid growth, but one of the key ones has been the ability of local companies to attract investment from investors who wouldn’t previously have considered Northern Ireland as a jurisdiction in which they’d be able find high potential companies to back.
While around £40m of the money invested last year was from Northern Ireland sources, 71 per cent of the total sum came from parties based outside the region. Maintaining and growing that interest from international venture capital investors is crucially important if we want more of our businesses to be able to close big funding rounds that will truly enable them to scale.
Among the deals done last year were 20 in the £1m to £5m range, ten with a value of more than £5m and five deals worth more than £10m. That’s impressive when measured against where we were even a few years ago, but why stop there? Shouldn’t we be aspiring to many more £10m+ deals and beyond?
That aspiration is the reason Catalyst runs its annual Inbound Investors event (www.inboundinvestors.co), which brings external investors to Belfast and, after careful research, selectively matches them with companies who we believe be of real interest to them and vice versa – putting the companies together with investors who have relevant expertise to help them grow.
We recently hosted a kick-off breakfast at the House of Lords to give London based VCs and investors a taste of the sorts of companies they will find here in Northern Ireland.
Around 60 investors came to the meeting, meeting a sample of successful businesses and local promoters from here, teasing the opportunity that will be available at our main event in Belfast in September. The idea is to support our companies but in the process also support the growth of the local economy.
Companies in Northern Ireland have got past old stereotypes about venture capitalists and now see VC money as an efficient way to grow quickly. The numbers for the past few years show that if they have a good product and a good story to tell, investors are now interested in them too.
On a per capita basis Northern Ireland was always the fourth region but recent statistics show it is now getting more VC investment per capita than Wales. We’re coming from a low base and we’re behind where we want to get to, with Scotland well ahead. But there is no reason we can’t continue to punch above our weight.
Northern Ireland has good angel, pre-seed and even seed investors. But to fulfil our potential we will need investment from beyond the region and the support of a broader capital pool than is available here. We want to see more first-time investors coming out of Inbound Investors this year.
Large investors are looking for the right type of companies – with recent deals showing the broad interest in IT and health and life sciences. But there are also stories being built around companies in agri-tech, food security, and other areas where there is a strong ecosystem, supported by our universities.
It would definitely be helpful to have more reference companies in Northern Ireland for investors to look in at. Kainos is probably the region’s flagship company in this space at the moment, but we need more so that newer companies can see what’s possible.
We know there remain some issues around early-stage funding support from government in Northern Ireland, which is not where it was two or three years ago, meaning the pipeline of emerging companies perhaps isn’t as robust.
But recent success means a lot of funds who hadn’t considered Northern Ireland now will. It is up to us to put on a good event and help companies and investors to capitalise on the opportunities.
:: Kieran Dalton is head of scaling Catalyst
