IP Group, a London-listed intellectual property company, has teamed up with the European Investment Fund to create a £30 million venture capital fund.
IP Venture Fund II will invest alongside IP Group in spin-out companies from IP Group’s university partnerships and other collaborations. The European Investment Fund (EIF) has contributed £20 million to the fund and the remaining £10 million is invested from IP Group’s balance sheet.
The fund will co-invest with IP Group. The investment ratio between IP Group and EIF will be 4:1, as IP Group will also directly invest in companies alongside the fund. The investment vehicle will be managed by Top Technology Ventures, the venture capital fund management subsidiary of IP Group, according to a statement.
IP Group provides companies with access to business building expertise, networks, recruitment and business support. “We work with academics in universities [in the UK] to identify ways to commercialise that intellectual property,” Charles Winward, managing director of Top Technology Ventures, told Private Equity International.
The fund will typically be allocating £500,000 to £1 million in each investment, Winward said. “[Considering the ratio] IP Group would be typically [investing] four times that amount. This fund gives us is the ability to deploy approximately £2 million to £3 million per portfolio company,” Winward said.
The fund, which will typically make all-equity investments, hasn’t deployed any capital yet. It will spend three years investing the fund, but will remain invested in most of the companies for six to seven years, Winward said.
It is the second time IP Group and EIF have joined forces; in 2006 the pair set up the IP Venture Fund, a £31 million 2006 vintage.
“We have been working with IP Group since 2006 and have been impressed by the Group’s ability to build valuable companies from the best of British intellectual property and evidence returns to co-investors and shareholders,” Piyush Unalkat, principal at the EIF, said in a statement.