Scale Ireland also found that 35.4pc of respondents to its annual survey were unaware of the landmark EU AI Act.
Irish founders have pointed fingers at funding as their biggest concern for the fifth year in a row, finds the latest annual Scale Ireland State of Start-up Survey, published today (13 February).
Scale Ireland surveyed 209 founders and CEOs of tech companies from Ireland. Nearly 75pc of them told surveyors that attracting private capital is “difficult” or “very difficult”.
Similar numbers found it hard to attract private capital back in 2022 – when the report was first launched – as in 2025, when Scale Ireland reported 80pc of respondents were finding it hard to attract capital.
This finding is in line with a 2025 Government report which found that Irish scale-up enterprises would face a €1.1bn gap in equity financing over the next three to five years.
“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,” said the not-for-profit Scale Ireland’s CEO Martina Fitzgerald.
Compared to that earliest 2022 report, which found that one in four business leaders said recruiting and retaining staff was their biggest challenge, in 2026 only 9.1pc said the same.
The large majority of businesses surveyed (88.5pc) for 2026 said they did not use the Key Employment Engagement Programme (KEEP) to recruit and retain staff. 45pc believed the scheme needs to be reformed.
More than 60pc of the surveyed founders said that government supports – such as the KEEP scheme – are the “most critical” to successfully scaling a business.
However, there is a strong indication that founders don’t find the available supports for start-ups and scale-ups enough. More than 66pc of the survey respondents are not confident that Ireland is moving in the right direction in this instance, while 30.6pc are “confident” or “very confident” about this.
Meanwhile, more than 94pc of founders have already deployed or are prepping to deploy AI in their companies, the latest survey has found. 85% believe AI will add value to their company’s performance.
Other reports suggest that AI’s effects on the bottom line in Ireland are still expected to be lukewarm. According to PwC’s AI Agent Survey, 53pc of Irish participants see clear productivity boosts from AI agents, but only 38pc experience real cost reductions.
On top of that, Scale Ireland found that 35.4pc of its respondents were unaware of the landmark EU AI Act, while around 36pc said that they don’t know what impact the law will have on their business. Fitzgerald said that this needs to be “addressed urgently”.
The EU AI Act is arguably the most robust and detailed form of AI regulation in the world. The act is meant to regulate AI technology through a risk-based approach – the riskier an AI application is, the more rules apply to it.
“The survey demonstrates that, while progress has been made in areas such as the R&D tax credit, other challenges for the sector are very persistent,” said Scale Ireland chair Brian Caulfield.
“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.”
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