LONDON – Elderstreet Capital Partners recently announced a GBP45 million ($75 million) first close on its new specialist venture fund targeting European software and Internet companies. Michael Jackson, Elderstreet’s founder, confirms that the fund was heavily oversubscribed and will be capped at GBP57 million ($95 million).
Elderstreet has a long track record of successful technology-related venture investing in the United Kingdom. An adviser to the quoted investment trust Kleinwort Development Fund, the group also manages capital through the Elderstreet Downing and Matrix Triven Venture Capital Trusts. Three years ago, the firm formed the Elderstreet Investor Club in response to demand for information technology opportunities from high-net-worth private investors.
Explaining the rationale for Elderstreet’s foray into the institutional fund market – which was clearly vindicated by the success of the exercise – Jackson said the firm’s track record as a consistent early-stage investor in information technology companies over the past decade warranted an institutional fund. An additional attraction of the new vehicle from Elderstreet’s point of view is that it will reduce the group’s reliance on co-investors. The new fund will normally provide tranches of equity in the GBP1 million to GBP2 million ($1.67 million to $3.34 million) range.
Jackson emphasized that, unlike some recent funds with a clear e-commerce focus, the Elderstreet vehicle’s remit encompasses a broad range of Internet-related sectors, including enabling technologies and applications and software, as well as e-business ventures.
Historically, Elderstreet has focused almost exclusively on U.K. investments. While the new fund still will focus predominantly on its domestic market, “it can and will undertake the occasional continental deal,” Jackson confirmed.
The Elderstreet offering has attracted considerable interest from overseas institutions, particularly European funds-of-funds, and non-U.K. capital will predominate in the final structure. In all, some 15 particpants are expected to sign up for the fund, including Elderstreet’s investor club, members of which have combined to form an affiliate to the vehicle.