TLDR: Despite a significant global surge in generative AI venture capital investment, a new report from EY reveals that Irish AI startups are facing a challenging funding landscape, particularly those seeking investments between €1 million and €10 million. This is largely due to a shift in investor focus towards more mature, revenue-generating AI companies, leading to fewer but substantially larger deals.
A recent report by consultancy firm EY highlights a paradoxical situation for Irish Artificial Intelligence (AI) startups: while global venture capital (VC) investment in generative AI has seen an unprecedented surge, the funding environment for nascent Irish AI companies remains notably challenging. This difficulty is particularly pronounced for startups aiming to secure between €1 million and €10 million in funding.
According to EY Ireland’s latest Generative AI Key Deals and Market Insights study, global venture capital investment in generative AI reached a staggering $49.2 billion (€42.5 billion) between January and June of the current year. This figure has already surpassed the total investment for all of 2024, which stood at $44.2 billion, indicating a robust and accelerating global interest in the sector.
However, this global momentum has not translated into easier access to capital for many Irish AI startups. The EY report attributes this disparity to a strategic shift among venture capital firms, which are increasingly concentrating their investments on more mature, revenue-generating AI companies. This focus has resulted in a landscape characterized by fewer, but significantly larger, deals. The average transaction size for late-stage deals, for instance, has more than tripled to over $1.55 billion, a substantial increase from $481 million in 2024.
Grit Young, EY Ireland’s technology, media, and telecoms lead, commented on the situation, stating, ‘For AI start-ups, the funding environment remains challenging, particularly in the €1m to €10m funding space.’ She further elaborated that many high-potential startups find themselves in a ‘difficult middle ground,’ being ‘too advanced for early-stage support, yet not quite large enough to attract global venture capital attention.’
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Despite these funding hurdles, the report acknowledges Ireland’s strong appetite for AI adoption. Ms. Young noted, ‘In Ireland, the appetite for AI adoption is strong, and we are working with many indigenous and international companies who are already well established on their AI journey.’ However, the report also points out that many Irish startups, despite their eagerness to adopt AI, are struggling with access to both capital and essential infrastructure. This investment momentum is, however, expected to continue building into the second half of the year with the launch of new generative AI platforms.
