The British Business Bank plans to invest in university spinout investment funds outside of the Golden Triangle.
The British Business Bank, the UK’s economic development bank, is increasing the amount it invests in funds that finance ventures emerging from academic research, as the government seeks to boost support for university spinouts and attract third-party capital to the sector.
Chris Smart, investment director of funds at the British Business Bank, says six new fund investments are under consideration. Although he would not name specific investments, he says the bank is seeking to invest in funds outside of the Golden Triangle universities of Oxford, Cambridge and London.
“We think there is strong IP right across the country, and the funds we are looking at reflect that spread,” says Smart, who has been with the bank for the past nine years.
Founded in 2014, the British Business Bank has become the largest investor in UK venture and venture growth capital funds, accounting for 11% of all equity deals done in the UK and 15% of total equity investment. It has invested more than £1.1bn ($1.5bn) in UK startups over the past 10 years.
In February, the British Business Bank made a £20m investment in Cambridge Innovation Capital’s new £100m fund. Cambridge Innovation Capital is a £600m VC firm that invests in life science and deep tech startups with a focus on spinouts from the University of Cambridge. The bank invested in the fund alongside Aviva Investors, the investment arm of UK financial services firm Aviva.
The British Business Bank has also invested in UCL Technology Fund, an investment vehicle associated with University College London, as well as in Northern Gritstone, a VC investor in spinouts from the universities of Leeds, Sheffield, Manchester and Liverpool.
UK universities outside of the Golden Triangle have set up several investment vehicles in the past couple of years to provide financial support to their early-stage spinouts. Examples include Midlands Mindforge, a VC firm that aims to raise £250m to invest in spinouts from eight universities in the UK Midlands. SETSquared, a group of six universities in the UK’s southwest, launched an investment company last year which aims to raise £300m to invest in spinouts from its member universities.
The British Business Bank also makes direct investments in UK growth-stage startups. Recent investments include Maxion Therapeutics, a biotechnology company; Tokamak Energy, a fusion energy startup; and Purespring, a gene therapy company. It is the most active investor in UK life sciences and deep tech companies in areas such as the future of computing and advanced materials.
The bank has identified a lack of growth stage capital in the UK that results in startups moving to countries such as the US to raise capital for later stage rounds. “The ecosystem has historically missed long-term investors that are patient and happy supporting companies to their full potential. That’s something that we certainly advocate, and we try to show in the way that we support the companies we back, and also in the funds that we support,” says Smart.
