British Universities Look To Alumni For SEIS Funding

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British universities are increasingly offering investment opportunities to alumni to allow them to tap into Seed Enterprise Investment Scheme tax breaks.

Cambridge University has just announced ploughing a record £2.3 million in cash into 10 new start-ups in the year ending July 2013, all funded by SEIS or the Enterprise Investment Scheme (EIS).

The total is triple the amount invested in the previous year.

The university manages three SEIS start-up funds and an EIS that offer investors income tax relief and capital gains tax incentives in exchange for committing to a three-year investment with a new start business.

The 10 start-ups are all spin-offs from research projects at the university.

Help for entrepreneurs

They include a new method for treating thrombosis, a commercial stem cell application and developing smart drug capsules that monitor and dispense dosage delivery over several months.

According to specialist web site SEIS.co.uk, the fund managers are connected to the university – Cambridge Enterprise runs the three SEIS, while the longer established University of Cambridge Enterprise Fund handles the SEIS\EIS hybrid.

Around £7 million is still available for projects that pass the university’s strict business appraisal.

“The funds are there to give university companies the best start we can,” Dr Anne Dobrée of Cambridge Enterprise told SEIS.co.uk. “Our approach to funding helps entrepreneurs write better business plans, we have contacts who step in as mentors and extra funding is available for due diligence and proof of market studies.”

Other British universities and business schools are looking at alumni-led funding, following a similar template laid out by US colleges, but adapted to take advantage of the SEIS and EIS tax benefits for investors.

Venture capital aid

Oxford’s Said Business School Venture Fund is group of former student investors helping to finance companies with Oxford University links. The fund opened in 2006 with inputs from entrepreneurs Sir Phillip Green and David Bonderman.

The Cass Entrepreneurship Fund has £10 million of venture capital for funding new businesses linked to the London business school, while Sussex Place Ventures has money for start-up technology companies linked to the London Business School alumni network.

These longer-established funds tend to take stakes as venture capital trusts rather than following the SEIS model.

However, SEIS.co.uk says British alumni funding is a small but growing market in comparison to the massive China Europe International Business School’s CEIBS-CHENGWEI Venture Capital Fund, which has £60 million only for start-up or early growth ventures involving CEIBS alumni.

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