EIIS changes having a real impact

It is important to try to support your own and invest in Ireland, Alan Merriman, founder of Elkstone, said. “At Elkstone we have been doing that for many years now.”

Locally there have been significant calls for Ireland’s investor community to do more across Ireland’s venture ecosystem. Elkstone, Ireland’s leading early-stage venture investor, is working to deliver on this.

The law was changed recently so that individuals can more easily invest in an EIIS fund rather than in individual companies to avail of income tax breaks.

“With broad support from other stakeholders across the ecosystem, we advocated for the legislative change required to launch this fund, and we are now delivering on our promise to the government and the founder community that we would raise meaningful capital to invest in Irish early-stage companies”, Merriman said.

“The wonderful thing is that from our wealth management business we know that allocating to venture as an asset class makes compelling sense and to be able to do so with the added benefit of tax relief is a terrific incentive for private individuals to do so.

“Doing it via a diversified fund is all the more compelling – it reduces risk and provides a stronger case for attractive expected returns.”

EIIS is now more user friendly and the new legislation in particular means that one can invest in a fund like Elkstone’s, Merriman said.

“Venture is a high-risk space, one where any individual company you invest in could well lose money.

“Investing in a portfolio via our fund means that the winners should more than make up for the losers so that the overall portfolio delivers strong risk-adjusted returns on a blended basis – better than public markets investing. Thus, we think this diversified venture fund is a really smarter way to work your money.”

“At Elkstone, our mission is to help nurture a vibrant Irish venture ecosystem and the broader economic and societal benefits that this brings,” Merriman said.

“Our €100 million EIIS-approved fund will enable private Irish investors to more readily access and allocate to high quality early-stage venture opportunities and in doing so not only generate strong financial returns for themselves, but support and help build Ireland’s next generation of great companies.”

Elkstone is well positioned in the Irish market to help founders and other venture players bring their companies to the next level. The company has built and backed a stellar venture portfolio over the past decade, with a number of Ireland’s flagship start-up unicorns in their portfolio, and they also have a unique and extensive international network to leverage to the advantage of their Irish portfolio companies.

Elkstone has been deeply engaged with both the start-up community and investor community for quite some time now, said Merriman.

“Our aim is to help Irish start-ups to scale globally, while remaining headquartered in Ireland, creating high quality employment, and ultimately recycling capital to seed the next generation.

“Within our existing Irish portfolio, our investment has helped to support the creation of over 1,000 jobs to date. This is at the core of our mission. We want to be a catalyst in helping the ecosystem here get stronger and stronger.”

Merriman said that while the ecosystem here in Ireland for start-ups is improving, it is still nowhere near where it needs to be in comparison with other geographies.

“Our goal is to support innovative Irish entrepreneurs looking to address important economic, social and environmental issues in Ireland and internationally. We have invested in over 50 companies to date, the calibre overall is high, and we are only getting started.”

*

A broad spectrum of industries

Elkstone is a generalist investor engaged with a broad spectrum of industries from AI to digital health. Its existing venture portfolio includes companies like LetsGetChecked, Manna Drone Delivery, Protex AI, Flipdish and Soapbox Labs. Investments already in place for their EIIS fund include Allsorter, Danalto, and Output Sports – which they believe have the potential to be high performers too.

“We have built up a strong presence in the market and are well regarded as an investor that brings both venture expertise and a global network to the table. We are founder friendly, in terms of how we handle things and set out our stall.”

The Elkstone Ireland EIIS Venture Fund is unique in that it’s the only fund of its type in the market that gives private investors access to a diversified portfolio of high-quality venture capital investments, while also offering up to 40 per cent EIIS relief.

“The new fund will primarily focus on early-stage EIIS qualifying start-ups (seed & pre-series A) and typical initial investments in the €1 million to €2 million range,” Merriman said.

“We have successfully closed the first round of our innovative EIIS early-stage Venture Fund and are now targeting €100 million by the final close. We are really appreciative of the support from Enterprise Ireland and the Department of Finance in enabling us to bring this opportunity to market.

“This fund is the largest dedicated Seed stage venture fund in Ireland, with a €73 million first close achieved earlier this year. This is an attractive opportunity for private investors to make attractive returns, while also supporting Irish innovation, the economy, and making a positive impact but doing it in a diversified investor friendly way,” he said.

“Our fund is true venture investing. We are out scouring the Irish landscape finding the very best companies to invest in, some unfortunately will be losers, that’s the risk of venture investing, but we are confident the portfolio we will put together as a whole can deliver strong returns for our clients and new investors (as we have demonstrated historically).

“Our timing is very fortunate,” Merriman said. “As an investment manager it is good to have a fund with dry powder in the current market context. With the macro backdrop, the money is going to be badly needed and the reasons we had for setting up this fund are even more compelling today than when we started.”

Elkstone will do its final close before year-end, with limited capacity currently available. Merriman said that there is always going to be market turbulence, but allocating money continuously to venture is a considered and smart move, within a broader investment portfolio, if you can afford to do it.

“With our fund you can do this in a way that has a real impact. You can invest in Irish entrepreneurs; make a difference; support Ireland Inc and achieve very healthy returns via a portfolio approach along with the added benefit of the tax relief. It’s a perfect solution for those who want to allocate to venture,” he said.