Imperial College has launched a new round of the Imperial College Enterprise Fund (ICEF), which is raising funds from investors to support the spinouts and startups with a strong connection to the college. The goal is to raise £2 million and more that can be used to support innovative early-stage startups with great commercial potential.
This will be the third venture fund Imperial created, building on the success of its first iteration in 2020 and its second in 2021. These raised £2 million and £1 million, respectively, and have made 11 investments to date. The process of becoming investment-ready and the backing of ICEF has helped enable these companies collectively to raise £25 million in seed and later rounds from various investors.
Like predecessors, ICEF 3 will take advantage of the Enterprise Investment Scheme (EIS), a government initiative that incentivizes investment into high potential – but high-risk – technology-based businesses. And investors commonly seek out EIS opportunities through funds such as ICEF, which source suitable companies and provide management services.
Managing the fund and making final investment decisions are the jobs of Parkwalk, a venture capital management company specializing in technology-based businesses. And building the pipeline of investment companies is the job of the Startup Investments Team at Imperial, advised by the Imperial College Startup Investment Committee, a body packed with seasoned professionals from inside and outside the College.
For a spinout company or student startup, initial work on the innovation may have been supported with grants, small private investments, or even the founders’ own resources. But then the moment comes when more money is needed to take the project forward or pay for business development work that grants cannot cover. Then, they have to look for outside funding.
Preparing for investment is part of a wide range of support provided through Imperial’s ecosystem. For example, in the Enterprise Lab, students, staff, and alumni can develop their entrepreneurial mindset, skills, and networks. There are places like Hackspace for hands-on idea development, competitions like the Venture Catalyst Challenge and WE Innovate for providing motivation and funding, and accelerators like Undaunted to firm up business ideas. There is the White City Incubator when a startup or spinout needs a home.
The ICEF will contribute around £250,000 to that first £1 million round. This has an important crowding-in effect, helping to build investor interest and draw in business angels, institutional investors and other venture funds who might be willing to complete the round.
Along with being the first private backer of a spinout or startup, ICEF can also support young companies that have already secured investment or make follow-on investments in teams that it has backed before. The overall aim is to get them to the next big funding round, typically a Series A round of £10 million. Three of the companies have already gone on to raise a £10 million cheque, while a major corporation has acquired a fourth. These companies are Charco Neurotech, GripAble, Cheesecake, and Bonnet.
KEY QUOTES:
“Young companies can come to us, at any point in their planning, and say: we’ve got an idea, and we need half a million pounds or a million pounds to implement it. If the committee likes the idea, it can give them some of that money, and we can help them find the rest.”
“I work with the team to get them ‘investment-ready.’ Being investment-ready often involves thinking about how the investors are going to make money.”
“We are here for them and they can keep coming back to us. As a lead fund, we can say: we like what you’re doing, but we wouldn’t invest in this plan. However, we would invest in a plan to raise a bit more money or that was a bit more ambitious, for example.”
“Almost all university spinouts need about £1 million for their first 12-24 months. Then they need £10 million for the next 12-24 months, and after that they need £100 million. Finally, they are acquired or go public for £1 billion. That’s the journey that you want to go on. Our role is to do that first stage as quickly as possible.”
“In return for this investment, the ICEF takes shares, or equity, in the company. This differs from the founding equity Imperial receives in spinout companies, which recognizes its innovation ecosystem, leading research facilities and project funding. We don’t take equity, we buy equity.”
“We are used to fitting in with university timelines. We expect the fund to get a return in five to seven years, but we also realise that it might take ten years or more.”
- Brijesh Roy, Head of Startup Investment Funds at Imperial
“We are pleased to launch the third fund with the team at Imperial College Enterprise, which has an innovative ecosystem of deep science and technology businesses. With our expertise in scaling and commercialising early-stage university spinouts, and Imperial’s impressive global top-10 position in R&D, we are excited to be supporting the next wave of entrepreneurs.”
- Martin Glen, Investment Director at Parkwalk
