Alan Merriman leans across the table in Elkstone’s office near Baggot Street in Dublin, as he guides me through a detailed plan explaining what his business does and how it plans to grow in the future. Moments earlier, we had passed through a room filled with analysts working in the different divisions of the company which has three arms: venture, real estate and wealth management. Elkstone is on the ground floor, and its office curves around workstations and multiple screens where its team of 50 people is based. 

Founded in 2011, Elkstone was born in the middle of the financial crisis managing investments for a small number of wealthy families and individuals with a few higher profile clients including Elle Macpherson, the supermodel turned lingerie and swimwear entrepreneur and Roger Jenkins, the former Barclays banker. 

Today it has more than 400 clients as it builds into a leading Irish-based wealth and alternatives asset manager with a global reach. Its partners on venture investments include state agency Enterprise Ireland, our sovereign wealth fund, the Irish Strategic Investment Fund and in its property division, the Chicago-headquartered Harrison Street, an investment firm with assets under management of $56 billion. Its wealth management arm is open architecture giving its clients access to the world’s biggest investment banks, family offices and private equity firms.

 Elkstone is working with some big names, but it wants to do even more. “Our north star is enabling deserving investments across the island of Ireland,” Merriman explains. “We have a dual focus on the Irish market and the Irish diaspora.” 

This international ambition combined with growing its Irish business is a big part of Elkstone’s mission. “There is a massive opportunity,” Merriman said. “Ireland is a fast-growing European country and it has a diaspora of more than 70 million people with huge influence and reach.

“We want to enable deserving investments across the island of Ireland. And we believe we have the entrepreneurial vision to make this happen.” 

Underserved in wealth and investment management

I’ve interviewed Alan Merriman previously, and in the past, our focus has been on the venture arm of its business or on the pandemic. Elkstone is best known for being an early backer of LetsGetChecked, Flipdish, and Manna but it has invested in dozens of companies so it is regularly in the business news.

As we speak Elkstone is leading a $3.8 million pre-seed investment round in Zerve, a coding platform tailored for data science that Intel has selected for its Ignite accelerator programme. In May, Elkstone closed its €100 million early-stage Irish venture fund backed by ISIF. It also has its investment club, which brings together angels to invest in particular start-ups often at a later stage.

We will talk about investing in start-ups but first, we discuss Merriman’s vision for Elkstone, which is not only investing in large numbers of tech companies but is also building thousands of student apartments and a modern wealth management business catering for ultra-high-net-worth individuals to partners in professional services firms to senior employees in multinationals or Irish-owned companies.  

“We are very much positioning ourselves as Ireland’s investment partner – that’s our opportunity, but it’s also our investors’ opportunity,” Merriman said. “In venture – people talk about the problem. So, what’s the problem Elkstone solves? It’s a conundrum. We’re the fastest growing economy in the EU but we are completely underserved in wealth and investment management.

“There’s a big gap for numerous products. The two big firms – Davy and Goodbody – are owned by pillar banks so the market is going backwards.” 

Merriman said it wasn’t just a lack of products, but also a lack of digitally enabled platforms to manage investments that was the opportunity for his business. He said that the wealth that had been created in Ireland via blue chip multinationals over decades wasn’t being served as well as it could be by being offered a diverse range of investment products. 

“Think of the top talent that’s in those companies. Nobody is providing a proper wealth management service to them,” Merriman said. “Nobody is using them as access to North America and the influence that brings.” 

The mission to bring more capital into Ireland

Merriman said he wanted Elkstone to tap into the millions of people with Irish links living overseas. “When you think of us, Elkstone, don’t just think of the small sliver of high-net-worth individuals in Ireland – think of the diaspora market, think of the Irish abroad. Nobody’s going after the Irish globally,” he said.

“What’s our advantage? A halo brand, evolving wealth offering, the top talent we have and the culture we have.”

Merriman said Elkstone’s venture investments were like a “flywheel”, as one deal led to another. 

“We’ve always played into the diaspora out of Ireland, drawing money into Ireland, to help Irish venture, Irish real estate,” Merriman said. “But also, bringing in expertise into Ireland. And more importantly, helping companies scale out of Ireland.” 

“We have five projects going through various stages of planning that could provide in excess of 2,000 units.”

Elkstone’s mission, he said, was to bring more capital into Ireland. “We think we’re going to solve it by attacking the North American market, bring proper, meaningful capital into Ireland. We put our own money in the game too. We have this unique local and global network in terms of family offices, entrepreneurs and VCs that can have a real impact,” he said.

“Elkstone is doing something that’s very different. It’s building a special business that’s going to have a lasting impact, that every single person who passed through the door of Elkstone can be very proud of.

“We are building a dynamic, contemporary, Irish, financial services business that’s going to do good for this country and that’s going to connect Ireland to the Irish diaspora in a meaningful way. It’s going to bring real money into this country, that’s going to have real impact, that’s going to drive the wellbeing of the Irish economy both economically and socially, and be fit for a new Ireland, not an old Ireland.”

Property is a significant part of what Elkstone does. This business is led by solicitor Ciarán McIntyre, who is also a co-founder of Elkstone. Merriman said he was as frustrated as everyone else by the housing crisis but believed Elkstone had a role to play in trying to solve it.

We’re evolving into a fully-fledged real estate platform with the likes of Harrison Street backing us,” he said. Harrison Street is headquartered in Chicago where it employs 280 people and has more than $56 billion in assets under management. It is a frequent partner of Elkstone. 

“They’ve got a really strong pedigree in different sectors from student accommodation to life sciences,” he said. Elkstone is working with the firm on building student accommodation, most notably a five-storey property on Stoneybatter Place in Dublin 7 with 142 badly needed beds near the Technological University Dublin.

“Stoneybatter has been ranked the number one student accommodation property that Harrison Street has in its global portfolio from an ESG perspective,” Merriman said.

In May, Elkstone said it was developing 1,500 student accommodation beds in Dubin, Limerick, Cork and Galway including Stoneybatter. 

“In the longer term we are planning to have a portfolio in excess of 3,000 student beds on the island of Ireland,” Merriman said.

Elkstone’s first move into the sector was through providing senior debt and equity for the construction of Montrose student residences near UCD, but it now leads its own projects. “We’ve brought a lot of student accommodation onto the market, and there is a lot more to come,” he said. 

Elkstone is a significant investor in the private rental sector or buy-to-rent. “It’s a very important part of our portfolio,” Merriman said. “We have five projects going through various stages of planning that could provide in excess of 2,000 units.”

The company also owns a landbank in Blarney, the small village outside Cork. “We want to enable a new town over a five to 15 year period,” Merriman said. “Blarney will hopefully have its own intercity rail line and become a big part of alleviating the Cork housing situation.”

Merriman said Elkstone hoped eventually to build more than 1,500 houses there. He said tapping into the diaspora, especially in North America would be vital to solving the housing crisis here. “We need more capital to generate housing,” he said. “We need capital to do the things this country is not doing or is not doing enough of.” 

The level of angel money has dried up

Before the pandemic, Elkstone ran a venture showcase for 200 of its clients. Six companies presented including LetsGetChecked which is today worth over $1 billion. “It really resonated with the market being able to meet these companies,” Merriman said.

“The plan was to do it annually but Covid got in the way. It is a major event that celebrates successes in the market but also seeks to draw more people in to get the angel ecosystem going.”

Merriman said he believed Ireland doesn’t have as vibrant angel investing networks as it could. “It’s slipping back if anything because of what’s happening in a macroeconomic sense”, he said. “We’re determined to try and take it to a different level and the showcase is about promoting that.” 

The rate of investment by angels in Irish start-ups was falling, he said. “The level of angel money investing in the Irish market over the last 18 months has really dried up. There’s certainly not much more than a couple of hundred people who might be called active angels,” he added.

“There are people doing a deal or two and putting in maybe €25,000 and that helps but we do not have a culture of people investing in venture from €10,000 up to much more meaningful cheques. We just don’t.”

One of the reasons Elkstone set up its own €100 million fund was to try and spark more investment in Irish start-ups.

“We are Ireland’s largest early-stage venture fund, and a beacon and supporter of the ecosystem,” Merriman said. Elkstone has a team of 10 people working on venture alone, led by Merriman with three experienced venture partners. Niall McEvoy manages its venture investment team after joining the firm from Enterprise Ireland where he led its high-potential start-ups division. Angel investors, former bankers and tech mentors Barry Brennan and Martin Cass are also part of this team. 

“On the venture fund, we raised €100 million. By the end of this year €20 million is going to be deployed. We’ll have up to 15 investments with the fund by the end of the year,” Merriman said adding that Elkstone was working on two more venture investments with its typical stake in a business being about 12 per cent.

“We look at 500-plus companies before we actually invest. We have a high bar before we invest at a typical value of pre-money a little shy of €10 million.”

Merriman reels off some of the start-ups the fund has invested in including Output Sports, a wearable device for exercise analysis, Bluedrop Medical, healthcare start-up MEG, diversity and inclusion start-up Inclusio and Allsorter. The fund’s first phase of investment are all pre-series A but it would follow on its money.

“We’ll invest at series A and maybe even series B but only if we’ve invested initially,” Merriman said. Elkstone has invested in 15 start-ups using its new fund, and it has invested in 41 start-ups using its club model giving it a portfolio of about 60 companies it has a stake in. 

Real experts who can help companies succeed

What’s the difference between the club and the fund? “The fund is focused on Ireland only. It is early stage and gives a diversified portfolio to investors. It gives them the protection of being in a wide basket of the very best of Irish companies,” Merriman said.

“The club is where we bring clients together and they choose on a deal-by-deal basis whether they wish to invest or not. That is for both international deals and it’s for later-stage Irish deals. There’s clear blue water between the club and the fund. The fund is wider, we have more in it, the winners emerge, and then club members, if they wish, can follow their money at a later stage as those winners emerge”.

Elkstone said each of its portfolio companies had an ESG agenda. “We’re very focused on ensuring they have a very strong story in that regard,” Merriman said.

“The investment gap between the US and Ireland needs to be bridged.”

He said Elkstone had different panels of experts to help it hit its targets such as ESG. Orla O’Gorman, the former head of listing with Euronext for Ireland and the UK, is an advisory board member with a speciality in this area.

“Orla is helping founders on moving the agenda on ESG,” Merriman said. “We have a number of founders and operators in the Irish market and further afield who can help our companies in finding talent or sales and marketing or building new products.” 

Some of the people who advise Elkstone include Patricia Scanlon, Ireland’s AI ambassador, Ciaran O’Mara, CTO and co-founder of Protex, Daire Hickey, CEO of 150Bond, and a range of other advisors.

“We have real experts, real operators who can help our companies succeed,” he said.

Elkstone’s start-up fund needed changes to be made in EIIS scheme legislation to get up and going. “We got the legislation changed because our fund is designed to bring money into the start-up ecosystem.  The idea is to Give an individual angel exposure to say 30 investments so there’s less risk as there’s more diversification,” he said.

Merriman said he hopes by being able to give more investors exposure to venture, they might start to do more of it. 

Bringing more capital from the US into Ireland

Elkstone isn’t modelling its business on any one other investment firm. “We’re looking at the very best that’s out there in different fields,” Merriman said. “That could be Blackstone at an institutional level or Moonfare, a digital platform for private equity investing, in terms of how they are enabling democratic access to deals with a great interface,” he said.

We’re interested in what is the best of all the different models out there and trying to figure out how to tailor Elkstone to its audience.” Elkstone co-founder and head of clients Ruairí O’Neill is working closely with Merriman and the rest of his team on scaling the range of clients and services it can offer. Merriman said he believed one of the things Elkstone planned to do was to bring more capital from the United States into Ireland.

“The investment gap between the US and Ireland needs to be bridged,” Merriman said. “A total of 49 per cent of global capital comes from America. Less than 10 per cent comes from Europe. Ireland Inc’s advantage, which we’ve never properly harnessed outside of foreign direct investment, is getting US capital, private capital, institutional capital into Ireland properly.

“To unlock America requires building a contemporary financial institution and that’s what we’re trying to do. We’re about increasing wealth and enabling deserving investments across the island of Ireland.

“There’s an opportunity to connect the Irish business community in the US. The goodwill in America for Ireland is enormous. We’re not tapping that smartly as a country.”

“We’re only starting. There’s so much more to do.” 

Elkstone, according to Merriman, often started working with a new client in one area and gradually this evolved into others. 

“It’s all based on performance and based on trust and on building a relationship,” Merriman said. “Elkstone has its own product in venture and real estate but we’re very good at opening up global products for our clients, particularly in what we call liquid markets, any exchange trade, like the classics, stocks, equity and bonds.

“We’ve open architecture, so you can do real estate with Elkstone and you can do venture with Elkstone but you can also do everything through Elkstone. We can do it globally, not tied to any particular house, and that’s very powerful.”

“We can work with a Goldman or a HSBC or any third-party manager as we are open architecture,” Merriman said. “We act in the client’s best interest and execute the strategy our client wants with the best product and very strong value for money.”

Elkstone has more than 400 clients drawn from C-suite, entrepreneurs, founders, professional services and families. It is not just advising people who have sold their business. “We can be of immense value to people who’ve had liquidity events because we can be very helpful in putting in the right infrastructure to support them and enable them in terms of proper asset allocation and sophisticated wealth management. We can cater for all profiles,” he said. 

Climate is going to drive lots of change

Our conversation switches to how Alan Merriman and Elkstone see the future. “AI is going to be transformative. It really is. Climate is going to drive lots of change too as is geopolitical change,” Merriman said. “There’s going to be a lot of change and Ireland is not as well positioned for the future as it has been for the past.

“I think people are oblivious to the fact because we haven’t had really hard times for a while, that Ireland is in a competition. We’re competing against London, we’re competing against Paris, we’re competing against New York and Austin and Chicago. We’re competing for capital, we’re competing for talent, we’re competing for companies. Are we hungry enough?”

He added: “Ireland’s strategy and policy of foreign direct investment has been enormously successful. We can expect to win more foreign direct investment, but it’s going to be harder. We also need to be smarter about having a parallel strategy of what I call self-help.

“Irish people are great in business, but we need to back ourselves. We need to be disruptors rather than being the middle or the back office for others. How are we building new domestic businesses that are going to be the great and the good businesses of the next five, 10, 20, 25 years?” he asked.

What will Elkstone do to help prepare Ireland? Merriman said the job and challenge for Elkstone is to ask: “Can we be part of the solution? Can we be an enabler? Can we be a catalyst? 

“Elkstone has already created thousands of jobs via its investments. It is not down to us uniquely, but we’ve definitely been a catalyst,” Merriman said. “We’re also helping companies stay here in Ireland. But we’re only starting. There’s so much more to do.”