ET Capital finalises £270K fund opposing traditional VC winner-picking, diversity questioned
A new investment fund aiming to transform how early-stage Cambridge technology startups secure backing has closed its first round, raising £270,000 from a group of local investors.
The Cambridge Venture Index SEIS/EIS Fund 1, operated by ET Capital, plans to build a diversified portfolio of up to ten companies linked to the University of Cambridge. Its strategy is a direct response to what it identifies as a funding bottleneck in the region’s deep science community, where founders can spend months seeking capital from traditional venture capitalists.
According to the firm, conventional VC processes are highly selective, involving lengthy due diligence and a focus on picking single winners. This leaves many promising teams underfunded, it claims, while also resulting in concentrated, high-risk portfolios for the investors themselves.
ET Capital’s approach, described as relying on a clear process rather than technology, uses set criteria to make faster decisions. The method involves taking £100,000 minority stakes in a company’s first external funding round and applying minimal due diligence checks on titles and claims. The model was validated by analysing 200 Cambridge startups from accelerators including Cambridge Enterprise and Deeptech Labs, the firm states.
The fund is managed by a team with a 32-year track record in the Cambridge cluster, led by Managing Director Martin Rigby alongside James Griffiths and David Gill. Its goal is to provide what it calls “fast, founder-friendly capital” while unlocking the region’s potential for angel investors who might otherwise miss out on top deals.
A key differentiator, the firm says, is its focus on diversification to lower risk, contrasting itself with direct competitors such as Cambridge Angels and accelerator funds. It points to internal research indicating that five out of six synthetic index funds—a type of modelled portfolio tracking a specific group of assets—have outperformed the FTSE 100 since 1992.
The fund is currently reviewing its first five potential investments and aims to have stakes in ten ventures by the end of the financial year. It is targeting post-2020 startup cohorts where its modelling suggests returns could exceed 40%.
Future priorities include finalising those initial deals, attracting more angel investors through SEIS and EIS tax incentive schemes, and publishing data on its investment cohorts. In the longer term, ET Capital aims to launch similar index funds for the Oxford and London technology clusters, grow its assets under management to over £50 million, and establish its diversified model as a new standard for UK deeptech investing, as detailed by Tech Funding News.
