Elkstone announces €100m fund for high potential Irish start-ups

Finance house looking to deliver returns 5% per annum above MSCI performance

Finance house Elkstone has announced a €100 million fund targeting high potential early stage start-ups in Ireland. The fund plans to make investments in the €1-€2 million range in a number of sectors over the next three to four years, focusing on Irish founders who are building internationally scalable companies.

Elkstone is a generalist investor. Among its investments are online healthcare companies LetsGetChecked and Thirty Madison, digital food-ordering platform Flipdish, and drone delivery company Manna.

Elkstone initially announced plans for a €75 million fund at the start of the year. Chairman Alan Merriman said the decision to expand it came after Elkstone recognised the potential of the market.

“Based on the interest we’ve had, we are going to do a first close now and we are going to target €100 million by the end of the year,” he said. “We think for the ecosystem, getting to €100 million makes a lot of sense.”

The fund includes €20 million from Enterprise Ireland’s seed and venture capital scheme. A further €35 million has been committed by Elkstone’s existing client base, while management, including Mr Merriman, are committing €3 million.

More than 100 investors have come into the fund, Mr Merriman said, and although it initially targeted private investors, he is confident that by the time of the final close, institutional investors will be brought in.

This fund is the first to launch following the amendment to EIIS legislation, which will see investors benefit from EIIS tax relief of up to 40 per cent

Overall, the fund is targeting a return that is 5 per cent per annum above the MSCI world index.

“Nobody knows what the markets are going to do,” Mr Merriman said. “But if the markets go up by 20 per cent, we’d expect to deliver over time 25 per cent per annum in the market.

“If the markets are flat, we’d be very disappointed that we weren’t delivering at least 5 per cent per annum. The returns are going to be correlated to the markets but they should be at a premium.”

The news of the fund was welcomed by Tánaiste and Minister for Enterprise, Trade and Employment, Leo Varadkar. "This is an excellent outcome from Elkstone. This new fund is a real boost to the Irish start-up community," he said.