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23 June, 2022 - 12:14 By Tony Quested

Private investors can now buy shares in Cambridge University spin-outs

Private investors are being offered the chance to cash in on Cambridge University brainpower.

They are now able to invest in a fund from the University of Cambridge’s commercial arm, Cambridge Enterprise, which aims to commercialise the ideas and inventions of its academics, researchers, staff, students and alumni.

The minimum investment is £25,000 and the fund is accessed under the Enterprise Investment Scheme (EIS) which enables high net worth or sophisticated investors to receive up to 30 per cent tax relief on their initial net investment, as well as tax-free growth should the investments perform well, or loss relief if they fail.

The fund will seek to invest in 10 to 15 early-stage science and technology companies and is being launched in association with Parkwalk Advisors, the specialist university spin-out investor: £500,000 is now available to private investors via Wealth Club and the fund will close once its capacity has been reached.  

Jonathan Moyes, Head of Investment Research at Wealth Club said: “University spinouts are a thriving part of the UK venture capital ecosystem. 2021 saw a record £2.54 billion invested in the sector, up from £1 billion in 2016: £501 million of this was raised by spinouts from the University of Cambridge.

“It’s great to see private investors being given the opportunity to invest at a very early stage in some of the technologies being developed and commercialised at Cambridge. 

“The university’s world-renowned for its research, having been home to over 100 Nobel Prize winners and discoveries such as stem cell research and IVF.

“This is the ninth fund to launch from the longstanding collaboration between Cambridge and Parkwalk. Previous funds have had a bias towards technology businesses operating within hardware, digital health and medtech and the life science sectors.

“The fund invests in companies at an early stage, making it a high-risk and long term investment. But, for the right investor, we think this is an opportunity to gain exposure to an exciting asset class which is difficult to replicate elsewhere.” 

The EIS scheme exists to incentivise investment into the UK’s young and ambitious start-up companies. It does this by giving investors income tax relief of 30 per cent on initial investments, as well as providing the potential for tax-free growth on investments that perform well, or loss-relief on those that do not.

Portfolio company exemplars from previous iterations of the fund include Sano Genetics and VocalIQ.

Regarding Sano, it still takes 10-15 years for new drugs to reach patients and many never make it out of research and development due to prohibitive costs. 

Founded in 2017, Sano Genetics aims to accelerate the future of personalised medicine, by making the R & D process much faster, more cost-effective, and a better experience for patients. 

Sano has developed a platform to help connect patients who have rare and chronic diseases with leading research and clinical trials, making patient recruitment faster and providing researchers with tools to analyse anonymous and aggregated data. 

The business has doubled revenues every six months since its founding. It raised $11 million in February 2022 in a round led by Seedcamp and MMC, with participation from the University of Cambridge Enterprise EIS Fund. Proceeds are expected to accelerate research into long Covid, MS, Parkinson’s, and other chronic conditions.

VocalIQ – sold to Apple – was an early-stage investment and successful exit for the University of Cambridge Enterprise Fund II. 

VocalIQ developed proprietary software to improve dialogue interactions in voice-activated systems. The technology enables users to talk more naturally with their smart devices – phones, wearables, smart-home devices.
 
The business was originally spun out of Cambridge University. The University of Cambridge Enterprise Fund II participated in an initial £0.75 million funding round alongside co-investment from Amadeus Capital Partners. 

VocalIQ’s technology proved highly desirable and Apple acquired the business 15 months later, generating a significant multiple return for the fund.

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