QUBIS Innovation Fund (SEIS)

Founded in 1984, QUBIS is one of the UK’s leading technology transfer offices. It acts as the commercialisation arm of Queen’s University Belfast, which ranked as the top UK university for delivering Entrepreneurial Impact in 2019 and 2020, outperforming both Cambridge and Oxford Universities. 

In 2018, QUBIS was appointed the lead partner of the North by North West (“NxNW”) ICURe (Innovation to Commercialisation of University Research) accelerator programme, providing it with access to spinout opportunities from across the UK. QUBIS has since formed strategic partnerships and relationships with a number of institutions, including Innovate UK, providing the fund with access to deal flow across all its programmes.

QUBIS launched its first fund in 2021 and aims to invest in a portfolio of early-stage spinout companies, the majority of which will be sourced from successful cohorts of the ICURe programme. This is the second iteration of the fund. 

The fund is targeting a maximum raise of £3 million, of which Wealth Club has secured a £750,000 SEIS-only allocation.

Important: The information on this website is for experienced investors. It is not advice nor a research or personal recommendation to invest. If you’re unsure, please seek advice. Investments are for the long term. They are high risk and illiquid and can fall as well as rise in value, so you could get back less than you invest.

Read important documents and then apply

Highlights

  • Proprietary deal flow through NxNW ICURe Incubator
  • Strong investment process with a focus on market validation and customer discovery
  • SEIS allocation, EIS available on request
  • Target SEIS portfolio of 14 companies and a minimum of three, not guaranteed. 
  • Target return of 5x before tax relief – not guaranteed
  • Minimum investment £20,000 – you can apply online

The manager

Queen’s University Belfast (“QUB”) is a Russell Group institution and is a recognised world leader in several research sectors, such as life sciences, cybersecurity and electrical engineering. Its technology transfer office, QUBIS, was formed in 1984 to support spin-out companies from IP to IPO. Since its launch, it has created more than 90 spinouts, including three PLCs, and was ranked the top UK university for entrepreneurial impact in 2019 and 2020.

In 2018, Queen’s University joined North by North West – a consortium of seven universities in the northern United Kingdom. NxNW is supported with funding from Innovate UK and acts as a pre-accelerator for university researchers to validate their business potential. As the lead partner, Queen’s University facilitates its ICURe programme and assists companies through the spin-out process. 

QUBIS is led by Brian McCaul, the Director of Innovation and Technology at the university. Prior to joining QUBIS, Brian launched two of his own startups as well as the Innovation Commons – a community platform for university Technology Transfer Offices. Brian is responsible for overseeing strategy for both the QUBIS portfolio and new company formation within the NxNW ICURe programme. He is joined by David Moore (Head of Spin-Outs), Aoife McCawley (Spin-out Manager), Oisin Lappin (Corporate Finance Manager), and Anne Dornan (Enterprise Network Manager). 

Within the fund structure, QUBIS will act as the company mentor. In this role, it will conduct research, carry out due diligence, and recommend potential companies to Sapphire Capital Partners, the fund manager.

Meet the manager – watch our interview with Brian McCaul:

 

Investment strategy

To be considered for the fund, companies must demonstrate quantifiable market potential. This can either be through immediate revenue-generating opportunities or by completing an ICURe accelerator programme. QUBIS will primarily focus on the NxNW accelerator, however, as it strengthens its industry relationships, further opportunities in the Midlands, SetSquared (Southwest), and BBSCR (bioscience specific) ICURe programmes could become available.

ICURe is a 16-week full-time accelerator programme designed using “the lean start-up” methodology, the approach outlined in the bestselling book by Eric Ries. The programme is funded by Innovate UK and is open to all universities, although it favours opportunities in the North of England, Scotland, and Northern Ireland. 

ICURe’s purpose is to determine if companies have sufficient product/market fit and consumer demand is viable. The basic structure is as follows:

  • A team is accepted into the ICURe cohort and begins a rigorous three-month customer discovery process. During this time, teams are expected to interview over 100 potential customers. 
  • The findings are presented to an “Options Roundabout” – an experienced panel of venture capital firms, stakeholders, and investors. 
  • If successful, teams are recommended for spinout approval and apply for Innovate UK Funding (up to a maximum value of £210,000). To receive the funding, the teams must also secure an independent angel investor. If they cannot, they cannot proceed with the ICURe programme.

ICURe typically receives 60 applications each year and approximately only 16% of applicants will successfully complete the programme. 

Due to the nature of the fund, it is likely that most founding teams will have stronger academic backgrounds than entrepreneurial ones. As such, QUBIS will look to partner companies with experienced entrepreneurs from its existing network to create a balance between technical and commercial knowledge. QUBIS also has an incubator space within its office to support the growth and development of early-stage companies – allowing the fund to have daily contact with investee companies and founders.

Target return

The target return for the fund is 5x over a holding period of eight years (after fees and before any SEIS tax reliefs). Returns and timeframes are not guaranteed. 

Exit strategy

QUBIS anticipates that the majority of exits will take place after the investment has been held for an average of eight years, although some investments could take significantly longer. 

The investment team will work with each investee company to develop a range of appropriate exit strategies on behalf of the fund. This could include trade sales, listing on a stock exchange, or selling the fund’s share to a larger private equity firm or company.

Portfolio

The fund intends to invest in a mixture of EIS and SEIS-qualifying companies, however, Wealth Club has secured a £750,000 SEIS-only allocation. QUBIS has indicated to Wealth Club it expects to build an SEIS portfolio of 14 investee companies, with a minimum of three, not guaranteed. 

QUBIS will not target specific sectors but instead will focus on the potential of the companies. Historically, it has a track record of commercialising research from data analytics, cybersecurity and life & medical sciences, however, its existing portfolio spans various sectors.

QUBIS’s first fund launched in 2021 and raised £1.2 million, of which £980,667 was SEIS. QUBIS expects to have fully deploy the first fund by May 2022. 

The companies outlined below are historic investments made by QUBIS. They are examples of the types of companies an investor might expect but are unlikely to form part of a new investor’s portfolio. 

Aramune – Qubis SEIS.jpgAramune Technologies

A spinout from Queen’s University Belfast (“QUB”), Aramune Technologies Limited (“ATL”) is a biopharmaceutical company developing alternatives to harmful ingredients in animal and consumer healthcare products.

Historically, farmers have relied on antimicrobial additives to control infections and manage wellbeing in livestock. However, this has contributed to a rise in antibiotic resistance and environmental contamination. Given these negative effects, there is increasing pressure for global regulation and safe and effective replacement therapies.

ATL’s first product, Aramune, is a natural extract originally discovered by Prof. Brian Green at QUB’s Institute for Global Food Security. The compound is derived from plants and when purified and added to feed, boosts the natural immunity of piglets. Currently, a similar effect is achieved with zinc oxide but its use will be banned in the EU from 2022.

ATL has already conducted commercial feasibility trials to confirm Aramune as a viable replacement for zinc oxide and while the product will initially be targeted towards pig feed, there are further opportunities in livestock and the domestic pet food market. 

The company progressed through the ICURe process in 2021 and secured a £300,000 Innovate UK grant to develop a commercially scalable manufacturing process. The fund invested £150,000 in the business in February 2022 alongside other QUB funds, Clarendon Fund Managers, and private investors.

ReproGo – Qubis SEIS.jpgReproGo

Stem cells are essential for disease modelling, drug discovery, and regenerative medicine research. However, current processes for deriving them are often complex and carry ethical issues when acquired from embryonic sources.

In contrast, ReproGo’s technology focuses on induced pluripotent stem cells (iPSCs) – adult cells which have been genetically reprogrammed back to an embryonic cell-like state. These cells can be generated from tissue samples and also allow for the production of patient-specific cells for individualised therapy.

Current practices for isolating and cultivating iPSCs often involve skin biopsies with low genetic stability and efficiencies of less than 1%. Comparatively, ReproGo has developed a “one-step” cell reprogramming solution it believes only requires 1ml of blood, is highly reproducible and approximately 10x more efficient. 

The business has focused on R&D over the last two years, having graduated from ICURe in 2019 and received a £200,000 Innovate UK grant. Its next steps are to negotiate a licence with Japan Academia, which holds a worldwide patent on a small element of the iPSC process (nearly all companies in this field require the same licence). Once secured, the company will initially target sales to academia with commercial sales hopefully to follow. 

The fund invested £50,000 into the business as part of a £140,000 funding round in November 2021.

Previous exits and failures

Due to the young age of the fund, it has yet to have any exits or failures.

Performance

This fund launched in 2021 and made its first investment in November 2021, so it does not yet have a 12-month track record.

Risks – important

This, like all investments available through Wealth Club, is only for experienced investors happy to make their own investment decisions without advice.

SEIS investments are high risk so should only form part of a balanced portfolio and you should not invest money you cannot afford to lose. They also tend to be illiquid and hard to sell and value. Before you invest, please carefully read the Risks and Commitments and the offer documents to ensure you fully understand the risks. 

Tax rules can change and benefits depend on circumstances.

This SEIS fund invests in early-stage businesses which are more likely to fail than larger ones. So you should expect a number of failures in the portfolio, or even be prepared for all companies to fail.

Any exits are likely to take considerably longer than the three-year minimum holding period. Equally, an early exit could affect tax relief.

Charges

A summary of the main charges and savings is shown below. Some of these will be payable by the investor, whilst others by the investee companies. The investment may have additional charges and expenses: please see the provider documents, including the Key Information Document, for more details.

Investor charges
Full initial charge 3%
Wealth Club initial saving
Net initial charge through Wealth Club 3%
Annual management charge
Administration charge
Dealing charge
Performance fee 20%
Investee company charges
Initial charge
Annual charge 2%
All fees and charges are stated exclusive of VAT, which may be applicable. Any fees and charges payable by the investee companies or the underlying businesses do not directly come out of your investment. However, they will effectively reduce the returns generated by investee companies and therefore impact your investment.

More detail on the charges

Timing of the offer 

The fund anticipates taking up to twelve months to fully deploy investor capital following the closing dates. However, it may take longer.

The fund close date is 31 May 2022. 

Our view

QUBIS is an established institution, with more than three decades of experience in commercialising technology and supporting early-stage companies. In this time, it has had several successes, including three IPOs and ranking as the top institution for entrepreneurial impact two years running – past performance is not a guide to the future. 

This reputation has helped QUBIS secure valuable industry connections, including becoming the lead partner for NxNW and forming a close relationship with Innovate UK. This arrangement provides exclusive ‘first-look’ deal flow from universities and accelerators across the UK as well as access to non-dilutive funding through Innovate UK’s grant schemes. 

Furthermore, the fund’s connection to the ICURe programme should help facilitate its robust selection process, creating a high barrier to entry that is rare for a SEIS fund. In our view, while QUBIS is a recent entrant to the SEIS market, its experience, strategy, selection process, and industry connections make this a compelling, if high-risk, SEIS offer for experienced investors.

Read important documents and then apply

Wealth Club aims to make it easier for experienced investors to find information on – and apply for – tax-efficient investments. You should base your investment decision on the provider's documents and ensure you have read and fully understand them before investing. This review is a marketing communication. It is not advice or a personal or research recommendation to buy the investment mentioned. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination.

The details

Type
Fund
Sector
Technology
Target return
5x
Funds raised / sought
£750,000 sought
Minimum investment
£20,000
Deadline
31 May 2022
Last updated: 11 April 2022

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