Multi-family office focused on venture, real estate, and wealth management firm Elkstone Partners has announced a new €100 million fund that is specifically targeted at Seed and pre-Series A Irish startups that qualify under Ireland’s newly revised Employment Investment Incentive Scheme. As the diversity of the firm’s self-description might imply, they invest across a wide range of industries, and with this fund are offering a ticket size ranging from €1 million to €2 million.
To understand the significance of this new fund, we need to have a look back at a previous iteration of the EIIS that included a caveat that companies qualifying for the relief programme need submit a proposal that saw at least 30% of the funds awarded directed towards a “qualifying purpose”.
Without meeting this target, no "statement of qualification" could be issued, thus leaving investors out in the cold. At least via this method.
New amendments to the EIIS legislation have removed this pre-qualifier.
Ok, so what?
Well, the "what" lies in the capital gains tax, a factor that weighs on every inventor's mind. According to Business Post’s Tom Maguire:
“EIIS has to interact with Capital Gains Tax (CGT), and it does . . . well kind of. If you invest in an EIIS company and it succeeds, then you pay CGT on any gain arising when you sell the shares, just as you would with other investments. However, when an investor makes a loss on disposing of their EIIS shares, that loss may not be allowable for CGT purposes. Had that investor put his or her money into a non-EIIS company and lost money on that investment, they can use that loss in reducing other capital gains in the same or future years.” - Tom Maguire, Business Post
The ubiquitous Enterprise Ireland provided a €20 million cornerstone for the new fund, with CEO Leo Clancy commenting, “This fund is the first to launch following the amendment to EIIS legislation and we look forward to seeing the difference that this private and public capital will make to the next generation of Irish entrepreneurs.”
Ireland’s Tánaiste and Minister for Enterprise, Trade and Employment, Leo Varadkar TD added, “The Government has committed to having 2.5 million people at work by 2024, which would be our highest ever level of employment. Backing our early-stage entrepreneurs is a crucial part of our plan to get there and I’m really happy to see the creation of this Fund, which will give those brave enough to start their own business, a chance to take it to the next level.”
Photo: Maxwell Photography
(left to right) Alan Merriman - Chief Executive Officer and Co-Founder at Elkstone , Orla O'Gorman - Elkstone Ventures Advisory Board, Kate Fullen - Venture Analyst at Elkstone , Leo Clancy -Chief Executive Officer at Enterprise Ireland