University fund backs wind power start-up

A WIND power technology company created at Edinburgh University will be the first to benefit from a new funding initiative.

Old College Capital, the recently launched investment arm of the university, will invest 200,000 into NGenTec, a spin-out from the School of Engineering.

The fund will make mid and late-stage venture investments into growth companies to help them develop. Investments will be made as part of large deals involving venture capital funds and other investors.

NGenTec is developing a novel generator for use in large wind turbines and recently confirmed a 4 million investment from a Dutch venture capital fund and Scottish Enterprise's Scottish Co-investment Fund, together with an industrial partnership with global gearing company David Brown.

Old College Capital is aiming to invest a total fund of up to 2m, making available amounts of 100,000 to 200,000 for future spin-outs with 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 that provides sector-leading returns while contributing capital to university companies.

The university has a strong track record in commercialising its research. In 2010, staff and students at the university formed 40 companies.

Nigel Paul, director of corporate services, 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, chairman of the university's endowment investment committee and a member of the equity management group, said: "The university's commitment to 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."

Hamish Mair, head of private equity at F&C Investments and an alumnus of the university, will chair Old College Capital's investment committee. He said: "This has the potential to grow into something substantial for the university and the wider economy. In Cambridge and parts of the US, the partnership of venture capital investors and new technology companies generates significant returns across the board. Old College Capital can be the focus for a similar partnership in Edinburgh."

Professor Sir Timothy O'Shea, principal, said: "This is a very significant step for the university as we seek to build on the highly successful commercialisation of our research activity."