European Investment Fund sets up first joint fund, with the UK's IP Group

10 Jul 2006 | News | Update from University of Warwick
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The European Investment Fund has partnered with UK technology commercialisation company IP Group to form a venture capital fund to invest in university spin-outs.

The European Investment Fund (EIF) has partnered with the quoted UK technology commercialisation company IP Group Ltd to form a venture capital fund to invest in university spin-outs.

This is the first fund to be set up on the basis of recommendations made in Technology Translator Accelerator, a pan European study of technology transfer activity funded by the European Commission and published by EIF late last year. The EIF intends to set up more funds based on the IP Group model of negotiating long-term technology transfer deals with universities and research centres.

The new fund, IP Venture Fund, has reached a first closing of £15.5 million of which London-based IP Group has put in £1.4 million, and expects to have a total fund size of about £30 million.

“We want it to be operational from day one, we would not go above £30 million because we think that is the right amount,” said Jacques Darcy, Head of Division Equity Fund Investments of EIF, in an interview. “We are now seeking funding from a range of different investors. Institutional investors, strategic investors, or those who also want access to the technology, venture capital funds and some individuals are being approached as well.”

The fund, which will be managed by an IP Group’s subsidiary Top Technology Ventures Ltd., will commit about 25 percent of the amount of post-seed financings of IP Group portfolio companies alongside capital committed by external investors, subject to the terms of the new fund.

Darcy explained that fund is not set up on the traditional venture capital model, as VC investors typically stay with an investment for only about 5 years. The IP Venture Fund is intended to more of a “generator of IP” and it takes a long-term view, he stated.  

“We intend to set up long-term partnerships from 10 to 20 years with a given university or a research centre,” said Darcy. “We won’t negotiate an individual investment every time. We will focus on striking the right relationship with the right institutions.”

“The key (of the IP Venture Fund) is to get the cream of the crop of the worldwide technology segment. You know that what is going to come out of the relationship will be top notch,” said Darcy

IP Group, formerly known as IP2IPO, has proven the model in seven long-term relationships it has established with King's College London, and the universities of York, Leeds, Bristol, Surrey and Southampton. As of 13 June 2006, 42 spin-out companies had been created among the group's university partners.

Darcy said the form of agreement with the IP Group could, and would, be replicated in other European countries.   

“Our relationship with IP Group is very important and it’s the first one we engaged,” said Darcy. “We are open to working with other investors. We are actually finalising an investment on the continent. We are working on deals in Belgium, Germany, Portugal, Scandinavia and elsewhere. I think we expect to sign another agreement by the end of September and a few more by the end of the year.”

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