University calls time on seed fund
A PROFITABLE and award-winning venture capital fund that commercialises academic research is being shut down by the University of Manchester.
The £6m Manchester Technology Fund (MTF), which was established 10 years ago as one of the 15 government-backed University Challenge seed funds, is being merged with the university’s larger UMIP Premier Fund.
But the university denied it had arranged the merger to bolster the Premier Fund with the MTF’s assets.
The UMIP (University of Manchester Intellectual Property) fund raised £32m at its first close last year but the downturn left it struggling to hit this year’s target of £40-50m. Speaking to TheBusinessDesk in January the Premier Fund’s managing partner Ernie Richardson admitted the fundraising environment was a “nightmare”.
A university spokesman said: “The MTF was not being used to plug any shortfall in the UMIP Premier Fund.” He stressed that the change had been brought about by the 2004 merger of the university with UMIST. This had increased the scale of university research and meant it required a larger fund.
“It makes sense to bring the MTF under the UMIP Premier Fund”, he said.
But the move has surprised some in the region’s venture capital community. Jonathan Diggines, chief executive of Preston-based Enterprise Ventures which manages the Rising Stars seed fund, said it was “a shame” MTF was being closed.
He said: “The fact there are two funds, not one, means there are two ports of call. There are too few funds so to lose one that might have looked at applications with a different eye is a shame because they are a good team.”
One private equity player, who works for a national firm and asked not to be named, said he was disappointed to hear of the closure. “It’s a proper VC with a track record and real motivation doing fantastic things,” he said.
The Manchester Technology Fund was headed by former 3i man Richard Young. No one at the fund’s office could be reached for comment. The university said the fund employed two staff and discussions over their future were ongoing.
The fund – originally backed by the university, the government and the Wellcome Trust – has invested £4m in 18 companies since 2000. Its most recent exit was the sale of software specialist Transitive to IBM in November.
Its portfolio companies have since attracted a further £45m from other investors. In November Mr Young told TheBusinessDesk that the fund had around £3m in the bank.
