Venture funds for campus firms

A new venture capital fund has been set up to provide seed and early stage development finance to campus companies and university…

A new venture capital fund has been set up to provide seed and early stage development finance to campus companies and university graduates.

There are very few venture capital companies providing funding at the start-up stage, and the £6 million Campus Companies Venture Capital Fund will operate as a limited partnership between the seven universities in the State, financial institutions, private investors and Forbairt.

The investments will range between a minimum of £30,000 and a maximum of £500,000.

The spread of interest across sectors will be fairly broad, though technology businesses are likely to be favoured, given the trend of campus innovations. Typically, the Campus Companies fund will invest beyond the prototype stage and before the business is operating, though projects in their earlier stages will also be considered.

Universities have tended to license out new technology, but Campus Companies plans to devolve intellectual property into a campus company operating in or near the relevant university. The fund is ready for immediate investment, and Campus Companies currently has three full-time staff looking for potentially suitable ventures.

Once invested, the fund will last until between 2006 and 2009, with a maximum equity stake of 50 per cent.

The venture is spearheaded by Mr Pat Ryan, a former Anglo-Irish Bank associate director, who has brought together the core members over the last 18 months. Allied Irish Bank and Montgomery Oppenheimer have contributed £1.35 million between them, and Trinity, UCD, DCU, UCC, NUI Galway, UL and NUI Maynooth have donated £1 million.

Private investors account for about £600,000 and include two Americans employed by Lehman Brothers, providing a strong research and contact base for companies trying to move into the US market. Forbairt has taken a 50 per cent stake matching the other investors' £3 million investment.

According to Mr Ryan, the campus area is a niche which hasn't been exploited here.

"A lot of interesting university projects find it difficult to raise development capital at the second stage. Iona Technologies would be one example. Niche funding is more high-risk than second-tier funds, but smaller investments across a wide-ranging portfolio spread the risk."

He has established links with each of the universities, and will work with the industrial liaison officers to ensure a constant flow of research information. It is also willing to co-invest with other interested parties.