Edinburgh University sets up new fund to invest in spin offs

Edinburgh University has set up a new fund, Old College Capital, to inject funding into spin-out companies.

The new investment group will make mid- and late-stage venture investments in companies as they grow and develop, as part of deals involving venture capital funds or professional investors.

As its first investment Old College Capital, a limited partnership, is investing £200,000 into NGentec, wind-power technology firm recently formed by the university’s School of Engineering.

The company, which is developing a novel generator for use in large wind turbines, recently closed a £4 million investment from a Dutch venture capital fund and Scottish Enterprise’s Scottish Co-investment Fund, and at the same time sealed an industrial partnership with global gearing company David Brown.

Old College Capital will invest a total fund of up to £2 million in tranches of £100,000 to £200,000 in spin-outs with very high growth potential. Further funds may be committed in the medium term, with the possibility of participation for external investors. Old College Capital expects to make three to five investments each year.

In the long-term, the fund is expected to build a significant and sustainable investment activity. In 2010, staff and students at Edinburgh University formed 40 new companies based on a range of technologies.

Nigel Paul, Director of Corporate Services at the University of Edinburgh, said, “We already have a substantial amount of high value knowledge about the technologies developed in the university and about their markets, and we have married that with considerable investment experience and knowledge from Edinburgh’s financial industry.”

Alan McFarlane of Dundas Global Investors, Chair of the university’s Endowment Investment Committee and a member of the Equity Management Group, said, “The university’s commitment into Old College Capital is modest compared with the total value of its portfolio of investments, but it offers the potential of a very significant return and, crucially, stands to benefit some of the University’s leading spin-out and start-up companies.”