ET Capital at home with groundbreaking new fund

The Cambridge Venture Index SEIS/EIS Fund 1 is geared to take a novel approach to early-stage venture investment, based on index-investing principles.

ET Capital will apply uniform investment criteria to up to 10 startups that have emerged from the University of Cambridge and other locally-based accelerator programmes, rather than following a standard venture capital approach of 'picking winners'. It is already working on the first five investments.

Prioritising investors' interests, the new Fund is focused on delivering predictable, risk-limited returns through structured diversification of venture investments and is backed by proprietary ET Capital research.

The study used the financing history of nearly 200 start-ups in the Cambridge cluster to model the performance of a series of synthetic venture funds from 1992 to 2024. Using the same criteria across all cohorts, five of the six synthetic funds outperformed the FTSE 100 Index.

ET Capital is deploying this approach as an alternative to more traditional VC methods which, while sometimes identifying winners, have several limitations including protracted investigation and negotiation that generate uncertainty and distraction for founders.

Also, VCs typically focus on the success of individual investee companies over building a balanced portfolio, which can amplify the volatility of venture fund performance.

Martin Rigby, managing director of ET Capital, said: “Cambridge's capacity for science and technology, both in the University and the wider cluster, generates a strong flow of start-ups each year which need capital to grow. Too often, these start-ups sacrifice time and attention trying to meet the needs of highly selective venture investors.

“The successful close of the first Cambridge Venture Index SEIS/EIS Fund demonstrates that there is significant appetite for an alternative approach, one that makes it easy for founders to access capital while offering investors reduced risk through diversification.”

Raising the new fund was targeted at individual investors who can often find it hard to access the best deals coming out of the University and other originators in the cluster.

Struan McDougall, an investor in the Fund and managing director of local angel syndicate Cambridge Capital Group, said: “I’m delighted that the fund is now ready to start investing in the exciting deep-science startups created in the Cambridge cluster. It’s an excellent opportunity for business angels, such as members of the Cambridge Capital Group who invested in the fund, to get exposure to a wide range of these exciting deals.”

The fund has also committed to a founder-friendly approach. ET Capital, as the fund manager, will have minimal control rights and will focus on supporting founders, rather than challenging their role as managers.

Richard Green, a prominent Cambridge angel investor and backer of the fund, said: “Early-stage ventures come in many forms and those that don’t fit the current favoured model can miss out on the investment they need to grow. ET Capital’s novel approach offers Cambridge's deep science startups an excellent opportunity for additional investment at a critical stage in their development.”