What is our EIS investment strategy?
We understand the potential commercial applications and unmet needs satisfied by new technologies and the intellectual property that protects their competitive position.
To do this, we assess the development and regulatory risks that need to be overcome and the likely time-frames to turn early-stage laboratory prototypes into world-class commercial products. As part of this process, we undertake intensive research, actively leveraging our extensive network of high-calibre contacts through our scientific partners and commercial advisory board, and beyond.
Once our EIS-eligible investments have been made, we actively support our portfolio of spinout companies, working with other leading stakeholders to develop their business and funding strategies.
What are university spinout companies?
Spinouts are companies formed to commercialise innovative research and technology which has been developed by leading university academic groups.
As recipients of significant grant and endowment funding, UK universities are centres of innovation, developing world-leading novel technologies that form the basis for spinouts in many areas such as digital health, biotech, artificial intelligence, cleantech and quantum computing. University spinout technologies usually benefit from significant patent protection.
OIC’s experienced team of investment specialists employ an active portfolio approach, investing in early-stage, EIS-eligible, knowledge-intensive spinout companies.
Why are spinout companies favourable EIS investment opportunities?
University spinouts receive significant assistance from the world-leading institutions they have emerged from, in terms of financial support and specialist legal, commercial and corporate expertise.
Academic founders are able to continue in their university roles, conducting and supervising intensive research that helps advance the spinout company. Moreover, the opportunities that these innovative technologies present, coupled with the reputations of the respective world-class universities, attract high-calibre, experienced management teams.
These qualities, in combination with a diversified portfolio approach, have the potential to greatly enhance the risk/reward ratio of these EIS-eligible spinout investment opportunities, maximising the returns for investors.
What is the Oxford Technology and Innovations EIS Fund (OTIF)?
OTIF is advised by OIC and invests in innovative EIS-eligible spinout companies from world-leading UK universities, with a specialist focus upon the Golden Triangle of Oxford, Cambridge and London. OTIF only invests in companies with strong IP which is usually protected by the parent university.
OTIF is structured to take advantage of HMRC’s Enterprise Investment Scheme (EIS) designed to help knowledge-intensive technology companies raise finance by offering tax reliefs to incoming early-stage investors. A diversified investment portfolio approach is also adopted to spread the investment risk.
Under existing EIS rules, income tax relief is available at 30% of the amount invested in qualifying shares, and can be claimed up to a maximum of £2m per annum. Up to 88% of each of OTIF’s funding tranches (after deduction of management fees) is allocated to EIS-eligible university spinout companies. Investments in companies which remain EIS compliant for three years are free of capital gains tax on realisation.
How does the UK university spinout ecosystem compare?
In recent years, there has been a significant increase in activities around the commercialisation of innovative, world-leading UK science and technology research. The Golden Triangle of Oxford, Cambridge and London is home to most of the UK’s leading technology companies, boasting four of the world’s top 10 universities.
The Golden Triangle can compete with Silicon Valley and Boston on many metrics, such as the number of companies and employees, while the total valuation of companies is yet to reach parity.
Several high-calibre institutes and organisations have been established to support this leading innovation, including Oxford’s Big Data Institute and BioEscaltor, London’s Crick Institute, Tech City and MedCity, and Cambridge’s Wellcome – MRC Stem Cell Institute. As a result, OIC expects to see many more EIS-eligible, world-class, spinout investments.
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