Investment Policy

The IUL Board and R&I seek to add value to the University's shareholdings in IUL's portfolio of spin-out and start-up companies through:

• Investment of IUL and/or University funds where it is decided that value can be generated;
• Professional management of all matters requiring shareholder input;
• Use of its experience and knowledge to support company executives and boards; and
• Protection of the University's brand and reputation in the spinout and start-up portfolio.

To support this activity the IUL Investment Committee ("Investment Committee") has been created to provide decisions on investments and divestments under the terms of the University's devolved authority to IUL. The Investment Committee will be supported by R&I who will maintain a Knowledge Exchange Strategy for start-up equity investment activity within IUL.

This Investment Policy forms part of, and should read in conjunction with, the Governance Framework in place between the University and IUL from time to time.

1. The Vice Chancellor of the Ulster University delegates certain levels of authorities to the IUL Board for the management of the University's shares in spinout and start-up companies and management of the IUL portfolio. The IUL Board is responsible for convening an Investment Committee pursuant to these goals;
2. The purpose of the IUL Investment Committee is:
   • To provide decisions on investments and divestments in the spinout and start-up portfolio;
   • The Investment Committee will be comprised of the Independent Chairperson, the Director of Research & Impact, the Chief Strategy and Finance Officer or his/her Departmental nominee and at least one other member of the IUL Board;
   • A quorum of the Investment Committee will be three members including the Independent Chairperson provided always that if the role and obligations of the Independent Chairperson are being fulfilled at any time by the Pro Vice Chancellor for Research as contemplated at paragraph 1.1 of Chapter 6, then a quorum will require at least one External Director to be present, whether in person or by telephone conference;
   • The Investment Committee will at all times be mindful of the arrangements for dealing with actual or potential conflicts of interest by directors of IUL as more particularly detailed by the Governance Framework and IUL's articles of association;
   • The Investment Committee will discharge its role through consideration of the pros and cons of investment or divestment opportunities proposed by the Head of Innovation & Impact;
   • The Head of Innovation & Impact will present to the Investment Committee on an as needed basis for either investment or divestment decisions; and
   • The Head of Innovation & Impact and the Finance representative will present to the Investment Committee at least two times a year on the valuation of the spinout portfolio, the Investment Committee's plans for investment in the portfolio and any potential future divestment opportunities.
3. Subject to the requirements of the Governance Framework being complied with at all times, the IUL Board delegates to the Head of Innovation & Impact responsibility for implementing the management of the spinout and start-up portfolio. In the absence of the Head of Innovation and Impact, the Director of Research & Impact has delegated authority to act on the Head's behalf.
4. The delegation of powers to the Head of Innovation & Impact will be at the discretion of the IUL Board with due attention to any existing rules and regulations of the University and the Governance Framework.

1. Formation of new Spin-Outs and Start-Ups

   Powers to form new spin-out companies and graduate start-up companies are delegated from Council to the IUL Board. On behalf of the IUL Board, the Director of Research & Impact has delegated authority to approve equity shares, sign deal sheets, approve shareholder agreements, approve subscription agreements, approve shareholder and board resolutions and to carry out all other activities associated with or ancillary to the formation of new spin-out and start-up companies.

2. Investment and Divestment
   Powers to invest and divest spin-out company investments are delegated from Council to the IUL Board. Within IUL, authority is delegated in accordance with the 2020 strategic categorisation of portfolio investments, as follows:

• Focus – this comprises a small pool of three priority portfolio companies which can deliver both financial and research impact for the University. It is expected that these companies will have a combination of IP and research service agreements with the University which drive the potential to deliver a significant financial return. Potential exit value of > £50m should be achievable for companies in this group.
• Potential – like the Focus category this will be a limited pool of companies. The difference between Focus and Potential is a reduced level of impact these companies are likely to create. However, they still have the potential to deliver significant financial returns to the University.
• Strategic – It is recognised that a small number of spinout companies may have a high strategic importance to the University. These companies are unlikely to deliver significant financial returns to the University. However, IUL could offer support through increased resource allocation from R&I. This would be a better use of resources than providing funds to support the companies.
• Monitor – This will be most of the spinout portfolio. R&I will continue to monitor these companies and remain an active and supportive shareholder. However, the IUL suite of funds will not invest due to lower potential for financial and impact returns.
• Hatchery – It is recognised that in the first three years the strategic direction of most spinout companies is still being developed. It may be difficult to assign spinout companies to one of the above four priority areas. Also, during this period there may be opportunities for the IUL suite of funds to acquire shares in these companies at a low valuation. A small pool of funding for opportunistic investments should be made available to companies in this area via TechStart NI.

The number of companies per category is fixed. There will be promotion and relegation between categories. For example, if a company on leaving the Hatchery classification wants to enter the Focus category a company from the Focus category must be moved to another category. The number of companies within the Monitor category is unconstrained as no investment is permitted in those companies.

Promotion and relegation from categories will be approved by the IUL Board, which will seek input from R&I on the investment category split and promotion/relegation from categories. IUL will retain the right to appoint a Non-Executive Director to the board of any company in which it places an investment, either financial or through license of intellectual assets. The IUL Board will appoint Directors as follows and all appointments are to be reviewed annually:

• Focus – the nominee Director will be an existing IUL Board member;
• Potential – the nominee Director will be an existing IUL Board member or R&I team member;
• Strategic – the nominee Director will be either Faculty staff or an R&I team member;
• Monitor – no nominee Director will be necessarily appointed; however, observer rights will be sought;
• Hatchery – the IUL Board will nominate an R&I team member as a Director or Observer.
  

3. The IUL Suite of Investment Funds

Innovation Ulster Limited – The annual investment allocated to the IUL Board from the University’s HEIF Funding will be set out in the institution’s three-year Knowledge Exchange Strategy. Further investment monies available from IUL’s divestments and receipts will be reviewed annually by the IUL Board at its first Board meeting of the financial year. The Investment Committee will consider the proposed split of investment across the funding categories as presented by the Head of Innovation & Impact. Once the broad category split has been approved the following delegations of authority will apply:

TechStart NI – is funded by Invest NI to provide investment capital to high potential startup companies in Northern Ireland, with targets for investment in Ulster University start-ups and spin outs. TechStart NI is required to seek approval from IUL prior to any investment in Ulster-linked companies and provides a seat for an Ulster nominee on the Advisory Committee of each of its funds. As provided by the Governance Framework, the Advisory Committee nominee will be the Executive Director or their nominee and this arrangement will be reviewed annually by the IUL Board.

The Enbarr Fund – has been created by Imprimatur Capital, through its AIFM regulated subsidiary Imprimatur Investment Management, with the University, through IUL, as the lead university partner. The Enbarr Fund is managed by Imprimatur Capital who work closely with the University to develop the investment pipeline and optimise relationships with key stakeholders in the investment ecosystem. Imprimatur is required to seek approval from IUL prior to any investment in University-linked companies and provides a seat for a University nominee on the Investment Committee of the Enbarr Fund. As provided by the Governance Framework, the Investment Committee nominee will be the Executive Director or their nominee and this arrangement will be reviewed annually by the IUL Board. Due to the quantum of investment in the Enbarr Fund, all investments made by IUL into this Fund will be required to be approved by both the IUL Board and also the Vice Chancellor.

Review

These arrangements and policies will be reviewed annually by the IUL Board at its first Board Meeting of the Financial Year and agreed between the Independent Chairperson and the Vice Chancellor as part of the agenda for the annual IUL Governance Review Meeting.