Deep tech and life sciences VC specialist NetScientific LON:NSCI, has been appointed as investment manager to Martlet Capital, via its wholly owned venture capital and corporate finance firm, EMV Capital. The mandate is to be managed on a discretionary basis and covers c.£23.3 million portfolio of investments.
In addition, EMV Capital has acquired the operational venture capital business of Martlet Capital, excluding the Martlet Portfolio.
Founded by Robert Marshall, Martlet Capital is a seed stage investor based in Cambridge, providing patient capital to deep tech and life sciences early-stage companies, primarily in the Cambridge tech cluster. The Martlet Portfolio comprises 53 investments with a fair value of c.£23.3 million as at 31 March 2024.
Dr Ilian Iliev, CEO of NetScientific and MD of EMV Capital, said: “This non-dilutive transaction represents an important milestone for the NetScientific group, aligned with our objectives to become a leading deep tech and life sciences venture capital investor in the UK and Europe. This is a logical next step in the deepening relationship between our organisations following our initial investment in 2021.”
Dr Iliev explained the deal significantly increases the fee income and critical mass of the funds practice. NetScientific also gains ‘work in progress’ for the potential launch of two further funds under the Martlet brand and a supportive Martlet investor base.
Martlet has achieved several significant exits, including Unicorn Abcam (IPO), Audio Analytic (sold to Meta), Cambridge CMOS Sensors (acquired by AMS), and Arachnys (acquired by AML RightSource).
Why Martlet Capital and why now?
NetScientific and EMV Capital invested in the initial fundraising rounds of Martlet Capital in September and December 2021, and have a current direct stake of 1.38% with 1.49% voting rights along with with an additional 8.2% in capital under advisory.
Having worked closely with Martlet Capital since incorporation, EMV Capital said it recently identified the opportunity to take on the investment management role for Martlet Capital, using its active management strategy to accelerate and maximise returns for the shareholders of Martlet Capital following exits from the Martlet Portfolio.
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The existing Martlet Business transfers to a new company within the NetScientific group, Martlet Capital Management Limited (MCM), and the Martlet Portfolio remains under the ownership of Martlet Capital.
Major deal for NetScientific
The transaction provides to NetScientific and its group an additional c.£23.3 million of funds under management, an increase of c.89% upon the £26.1 million of capital under advisory announced by the company for the period to 30 June 2023. It also brings recurring investment management fees for a minimum period of four years carried interest over the Martlet Portfolio.
In addition, the Martlet brand provides EMV Capital with further exposure to the deep network of Martlet Capital within the Cambridge high-tech cluster, known for its track record of generating high-value technology businesses in the deep tech and life sciences space.
EMV Capital said it intends to work closely with MCM in order to leverage the Martlet brand by means of exploring investor appetite for the proposed launch of two proposed new Martlet funds, each to be managed by EMV Capital if and when launched.
Preferential investment terms for future funds
EMV Capital has also committed to provide Martlet Capital shareholders with preferential investment terms should they wish to invest in future funds, certain co-investment rights relating to the Martlet Portfolio, and opportunities to participate in other investments advised upon by EMV Capital (including the portfolio companies of NetScientific).
For the year ended 30 September 2022, the Martlet business generated no revenues (given the nature of the business) and a loss of approximately £0.97 million.
