December 3, 2023

Another early-stage VC fund shut down in Europe this week as Elkstone €100 million ($108 million) in funding for Irish start-ups was finalized. It came just a day after Lifeline Ventures closed a €150 million ($163 million) fund for fledgling Finnish startups, while several others have landed across the continent over the past few months.

Elkstone, a wealth manager that has spent the past decade privately investing in the seed stage of future unicorns like Flipdish and LetsGetChecked, launched its first venture capital fund with the backing of the state’s Irish Strategic Investment Fund (ISIF) and Enterprise Ireland (No).

In total, the new fund has around 250 limited partners (LPs), including a number of unnamed businessmen from Ireland.

year in the making

Elkstone announces plans for its venture capital fund for the first time last january, with an initial target of 75 million euros. However, within three months, it reveals It raised the cap to 100 million euros, with a view to backing seed and pre-Series A startups investing between 1 million and 2 million euros.

While the fund is only now officially closing, Elkstone said it has deployed about 10 percent of its cash in six startups, including Blue Drop Medical and includeand several deals are “imminent.”

A big driving force behind the new fund is Recent Legislative Adjustments Employment Investment Incentive Scheme developed by the Irish Government (he), a move that enables Irish startups to secure investments that are more tax efficient for investors. The changes pushed by Elkstone mean investors can now enjoy tax breaks of up to 40%. Prior to this, it was impossible to build a fund of this size because of the risk/reward ratio, Elkstone said.

“Our fund’s investor base includes entrepreneurs and private capital as well as EI and ISIF, a key strength in helping us deliver meaningful value-add to Irish founders as they look to realize the potential of their business and scale up internationally,” Elkstone CEO Alan Merriman said in a statement. “While the macro backdrop is undoubtedly challenging, now is a good time to invest and we are very optimistic about the outlook for disruption and innovation.”

Granted, venture capital funding at all stages has mostly declined over the past few years, but the data suggests that early stage funds already more elastic, especially at the seed stage. In addition to the new fund from Finland’s Life Ventures announced yesterday, we have seen a number of early stage VC funds hit the European stage since February. For example, the UK’s Amadeus Capital Partners teamed up with Austria’s Apex Ventures on an €80 million ($87 million) fund aimed at investing in deep tech startups, while in France Emblem and Ovni Capital each announced a new €50 million fund. Euro ($54 million) fund. Meanwhile, in London, Playfair Capital closed a $70 million pre-seed fund.

Specifically for Ireland, Elkstone’s new fund represents one of the largest (if not the largest) to emerge from the Emerald Isle. In contrast, Dublin-based Frontline Ventures launched a €70 million seed fund for European B2B startups as early as 2021.

Having ISIF on board as an LP has been a huge boon for Elkstone and it comes at a time when Ireland is clearly doubling down on investment spirit – just last week revealed plans to create a sovereign wealth fund Year.

ISIF Director Nick Ashmore added: “The Fund expands our reach in the early-stage venture capital space and provides Irish businesses with a valuable new option to attract the capital they need to grow.”