Leading technology investor Mercia Fund Management (“Mercia”) has launched its sixth EIS and SEIS hybrid fund, which is purely focused on seeking investments originating from its extensive university partnerships across the Midlands, the North and Scotland, where it sees strong opportunities across key technology led sectors in which it holds deep expertise.
The University Growth Fund (“the Fund”) will use the same hybrid structure as Mercia’s previously launched tax-efficient funds, combining the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS), and investors can expect to realise their portfolios between years four to seven. The minimum investment is £25,000 (75% EIS and 25% SEIS).
The Fund is led by Mercia’s Head of Technology Transfer (Universities), Dr Nicola Broughton, who says about the opportunity:
“University spinouts provide a vital source of disruptive start-up businesses and technology, with many achieving successful commercialisation of their IP. At Mercia, we are pleased to be able to offer dedicated funding and expertise to spin-outs, which will allow more intellectual property to make it out of the lab, and onto the market.
“The Complete Capital Solution offered by Mercia, combining third party managed funds (including the University Growth Fund) and direct investment from Mercia, enables us to offer a single investment partner solution which can help commercialise spinouts from their infancy right through to exit with both capital and strategic support.”
According to the Spinouts UK Annual Report 2015, the number of successful exits by UK spinouts is continuing to rise, with the attributed IPOs, trade sales and mergers for the sector increasing year on year for the past four years. However, a fundamental problem in the provision of capital to support the UK’s university led start-ups is the historic geographic bias of capital to London and the South East, an issue which is inherent with early stage investment generally. The result is that the UK may be losing innovative, high-growth businesses from universities which don’t have the support to help commercialise their IP.
Dr Broughton comments:
“The Gold Triangle of Oxford, Cambridge and London is still very much the main investor focus, despite the fact that 52% of all active spinouts originate from the Midlands, North and Scotland.
“At Mercia, we are continuing to build and strengthen our university investmet partnership network across the Midlands, the North and Scotland, where we are seeing fantastic, and largely untapped, opportunities across key technology led sectors.”
Mercia Fund Management is part of Mercia Technologies PLC, which listed in December 2014 raising £70m from key institutions includding Woodford Investment Management, Invesco and Baillie Gifford to invest directly into the emerging stars from third party funds to scale the businesses further.
Dr Mark Payton, CEO of Mercia Technologies, said:
“Mercia has benefited from working closely with its university partners over many years resulting in a broad portfolio of early stage and maturing portfolio companies, some of which now trade on a profitable basis. As we scale our own unique investment model, we now have an opportunity to support new and existing university portfolio businesses with the University Growth Fund.””
The University Growth Fund opened on Monday 10th August 2015 and the closing date for the investment will be on or before Wednesday 30th September 2015. For more information, please contact Talon Golding at talong@merciafund.co.uk.