The Fund is an evergreen fund and aims to sell its investments, or receive a share of project income, in order to make
a financial return for the partners in the Fund and to reinvest in new
projects and companies. The Fund does not provide any grants.
Spin out companies
The
Fund will invest in a spin out company on the same terms as other
investors at the same time. The level of equity will be
based on a fair return for the level of risk in that particular
investment; we do not have any standard criteria regarding the
level of equity we will take. If we are the only investor then we will
sometimes make a loan, which is convertible to equity usually at a
discount to future funding rounds. Pathfinders and Projects
The
Fund will also invest in projects, where there is no spin out company.
In this case, our investment agreement will usually be with the
technology transfer office or the Institute and we will agree a share
of the project revenues to reflect the
risk taken by the fund. Usually this revenue share will be convertible
to equity if a spin out company is formed subsequently.
Other Features of our Investment
Conditions Precedent
Any offer of investment from us will probably contain
a number of conditions ("conditions precedent"), which have to be
satisfied before our money is released to institution or the company.
These might include, for example, conclusion of an agreement with the
institute over access to underpinning IP, or recruitment of a senior
executive.
Legal Agreements
In the case of a company, a shareholders agreement will be prepared, and the company's
articles of association prepared or revised. The fund can assist with
the preparation of articles of association and shareholder agreements
for new companies.The Fund will
typically require rights of veto over certain company matters, and will
take the right to appoint a director to the board of a spin out company.
Where the fund will receive a return via a share of
licence income and there is no company, a commercialisation agreement will be agreed between the
fund and the institute.
Rewards to Inventors
If you are an employee of one of Rainbow's partners seeking investment, we follow the staff policies
of the Rainbow institutes. Please contact your technology
transfer office for details of the scheme operating for your particular
institute.
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