Braveheart unveils £25m university fund

Published on Tuesday 19 June 2007 01:04

EDINBURGH University spin-out companies are set to benefit from an investment pool worth £25 million with the setting up of the largest fund of its kind in Scotland.

Braveheart, the Scottish venture capital group, said the fund would have rights of first refusal to invest in all commercial opportunities and intellectual property emanating from the country's biggest university.

The only exclusions will be medicine, veterinary activities and life sciences, where it may step in as a co-investor.

News of the fund, whose initial investors include the university and Bank of Scotland, as well as Braveheart's own clients, emerged as the investment firm posted maiden results as a listed company. Accounts for the year to 31 March, one day after Braveheart was admitted to AIM, reveal a pre-tax loss of about 163,000 after costs related to last June's aborted IPO. Revenues rose almost 10 per cent to just over 587,000.

Chief executive Geoffrey Thomson described the new fund as "a real partnership", with Braveheart sharing any financial gains with the institution.

Edinburgh University has a strong track record in technology spin-outs, creating 57 businesses over the past five years. Three firms - Wolfson Microelectronics, MicroEmissive Displays and Vision Group - have developed into publicly quoted companies.

Thomson said the as-yet unnamed fund would have a life span of eight years, with an option to extend that to ten.

"This fund offers access to capital for innovative intellectual property emanating from the university, to support it en route to commercialisation," he said.

"In a ten-year life expectancy of the fund we would expect to uncover at least one big successful public company."

Thomson added: "When the fund makes a profit, as fund manager we part with a quarter of that back to the university."

Braveheart, which in February unveiled a 12m funding partnership with the University of Strathclyde, has supported eight Edinburgh University spin-out companies since 2003.

Thomson said the firm was talking to other institutions about setting up similar funds.

A spokesman for Edinburgh University said: "On average, we produce one new company every month."

Adrian Smith, programme manager at the Edinburgh Pre-incubator Scheme, added: "It has always been difficult for science and technology companies to secure early stage equity funding.

"The new fund ... could fundamentally change the capital landscape for Edinburgh University entrepreneurs."

Braveheart, which raised some 6m from March's flotation, posted exceptional costs of 123,544 relating to its IPO.

Thomson said: "Floating a company with a small management team takes a heck of a lot of resource. It was a big year for us. We changed the business and took quite a lot of costs in terms of investing in the future."

Last week, Spiral Gateway, a microchip specialist spun out of Edinburgh University in 2004, attracted fresh funding of 320,000 via Braveheart's Alpha EIS fund.

From scholarship to business

Edinburgh University is the largest seat of learning north of the Border and is rated fifth in the UK and first in Scotland for research income.

• The institution attracted research awards of 139 million in 2005-6, including 23 awards in excess of 1m. In the same year, it supported the formation of 23 new companies and businesses.

• Over the past five years, 57 companies have been created, of which about 90 per cent are still trading. These companies have raised around 18m in investment funding and employ more than 150 staff.