Universities Look To SEIS To Fund Spin-Off Companies

Cambridge University invested a record £2.3 million in research spin-off projects under funding raised under the Seed Enterprise Investment Scheme (SEIS).

The university runs three SEIS fresh start funds and a mixed Seed Enterprise Investment Schemes (SEIS) and Enterprise Investment Scheme (EIS) fund for developing projects spawned in the university’s labs.

Much of the money to start the businesses comes from former alumni and friends of the university as a result of the tax breaks offered by SEIS and EIS.

Among the technologies under development as a result of university funding are:

  • A new treatment for thrombosis
  • A commercial application for using stem cells
  • Smart drugs that deliver measured doses over periods of up to six months

For the 12 months up to July, 2013, the university put a total £2.27 into 10 start-up firms – a record high for the university and triple the sum invested in the previous year.

Alumni funding

The three SEIS funds are managed by Cambridge Enterprise, the university’s commercial arm, while the University of Cambridge Enterprise Fund runs the SEIS/EIS combined fund.

The funds have another £7 million set aside for funding projects.

“The funds are there to give university companies the best start we can,” said Dr Anne Dobrée of Cambridge Enterprise. “Our approach to funding helps entrepreneurs write better business plans, we have contacts who step in as mentors and extra funding is available for due diligence and proof of market studies.”

Other universities and business schools are looking at alumni-led funding in the same way US universities have done so for many years.

Oxford’s Said Business School Venture Fund is a student-led group investing in companies linked to Oxford University. The fund started in 2006 with donations from entrepreneurs Sir Phillip Green and David Bonderman.

The Cass Entrepreneurship Fund is a £10 million venture capital fund financing new businesses linked to the London business school, while Sussex Place Ventures invests in start-up technology businesses under the auspices of the London Business School alumni network.

Survival more likely

These older funds are based more on a venture capital trust template than SEIS.

One of the largest investment funds linked to a business school is the China Europe International Business School’s CEIBS-CHENGWEI Venture Capital, a £60 million plus fund that will consider investments in start-up or early growth ventures founded or managed by CEIBS alumni.

Stuart Morris, entrepreneur in residence at Henley Business School, has spoken out in favour of SEIS and EIS investments.

“Start-up businesses are risky venture whatever anyone says, and that’s regardless of whether they have support from a SEIS or EIS. But companies with SEIS or EIS support are more likely to survive, as they have more support from experienced entrepreneurs,” he said.