Funding still the biggest challenge in 2026

Irish Tech Founders Face Persistent Funding Gap as AI Adoption Surges, Survey Reveals

Irish tech founders continue to grapple with the same core challenge that has plagued the sector for years: access to private capital. According to the latest State of Start-up Survey from Scale Ireland, nearly 75% of founders and CEOs surveyed say attracting private investment remains “difficult” or “very difficult”—a figure that has barely shifted since 2022. This persistent bottleneck comes despite growing optimism around artificial intelligence and its potential to drive business value.

The annual survey, which canvassed 209 founders and leaders of Irish tech companies, paints a picture of a sector at a crossroads. On one hand, AI is rapidly becoming a cornerstone of business strategy, with over 94% of respondents already deploying or preparing to deploy AI technologies. An impressive 85% believe AI will add tangible value to their company’s performance. On the other, structural challenges—particularly around funding and government support—continue to hold back growth.

The funding crisis is not just anecdotal. A recent government report estimates that Irish scale-up enterprises will face a €1.1 billion gap in equity financing over the next three to five years. This shortfall threatens to stifle the next generation of homegrown tech champions, many of which struggle to compete with better-capitalized US peers.

Martina Fitzgerald, CEO of Scale Ireland, highlighted the complexity of government supports as a major pain point. “While funding remains the biggest issue for start-ups and scaling companies, there are also considerable and persistent problems with enterprise supports. They are far too complicated,” she said. This sentiment is echoed by the survey’s findings: only 9.1% of respondents now cite recruitment and retention as their biggest challenge—down from 25% in 2022—suggesting that other issues, particularly funding, have taken center stage.

The Key Employment Engagement Programme (KEEP), designed to help companies attract and retain talent, appears to be falling short. A striking 88.5% of surveyed businesses said they do not use KEEP, and 45% believe the scheme needs reform. Yet, more than 60% of founders still see government supports as “most critical” to scaling their businesses, underscoring a disconnect between available resources and their practical utility.

AI adoption is surging, but awareness of regulatory frameworks lags. The survey found that 35.4% of respondents were unaware of the EU AI Act, the world’s most comprehensive AI regulation, which entered into force in August 2024. Around 36% admitted they don’t know what impact the law will have on their business. Fitzgerald called this “a gap that needs to be addressed urgently,” warning that lack of preparedness could expose companies to compliance risks as the Act’s provisions come into effect.

The EU AI Act adopts a risk-based approach, imposing stricter rules on higher-risk AI applications. For Irish tech companies, understanding and adapting to these regulations will be crucial as they scale and expand into European markets.

Despite the challenges, there are signs of cautious optimism. Compared to 2022, fewer founders now see recruitment as their top hurdle, and a significant majority believe AI will drive value. However, confidence in Ireland’s direction for supporting start-ups and scale-ups remains low: 66% of respondents are not confident the country is moving in the right direction, while only 30.6% express confidence.

Brian Caulfield, chair of Scale Ireland, emphasized the need for bolder action. “Start-up and scaling companies remain hugely undercapitalised relative to US peers. Greater incentives are required to encourage private investment by angels and to mobilise pension fund savings to invest in indigenous enterprises.”

As the Irish tech ecosystem continues to mature, the survey underscores a critical juncture: while innovation—especially in AI—is accelerating, foundational issues around funding, regulatory awareness, and government support must be addressed to unlock the sector’s full potential.

Tags: Irish tech, Scale Ireland, start-up funding, AI adoption, EU AI Act, equity financing gap, KEEP scheme, government supports, tech founders, Silicon Republic

Viral Sentences:

• Irish founders say attracting private capital is still “very difficult” after five years.
• 94% of Irish tech companies are deploying or prepping AI—but 35% don’t know about the EU AI Act.
• Ireland faces a €1.1bn equity financing gap for scale-ups over the next five years.
• Only 9% now see recruitment as their biggest challenge—funding takes the spotlight.
• 66% of founders lack confidence in Ireland’s direction for start-up support.
• AI’s productivity boost is clear, but real cost reductions lag at just 38%.
• “Start-ups remain hugely undercapitalised relative to US peers,” says Scale Ireland chair.
• Government supports are “far too complicated,” warns Scale Ireland CEO.
• AI is surging, but regulatory awareness is lagging in Ireland’s tech sector.

,