Cambridge University has joined forces with Parkwalk Advisors, the London-based investment firm, for the launch of a new fund enabling private individuals to invest in business start-ups.

Major universities are big players in the fund management industry, with the Harvard Management Company running the institution’s $32 billion endowment fund. Oxford University in the UK runs two funds with a nearly of £1.3 billion ($2 million) in asset under management between them.

The new fund will help people to invest in new companies connected to Cambridge. When providing capital for new companies through the enterprise investment scheme in the UK, investors are entitled to 50 per cent tax relief on the amount invested, and gains on shares held for three years under the scheme are exempted from capital gains tax.

The fund will combine the established EIS with the new seed enterprise investment scheme, announced in the UK budget in March.

“Cambridge has a key role to play in an innovation-led recovery in the UK,” said Professor Sir Leszek Borysiewicz, vice-chancellor of the university.

The university is aiming to raise £1 million to establish the fund. Last year, Cambridge Enterprise reviewed over 50 new business ideas and made 11 investments totalling £640,000, the university said in a statement.

Earlier this year, Parkwalk Advisors launched a EIS to hold early-stage firms spun out of universities and the intellectual property of research organisations. The vehicle is called Parkwalk UK Technology Fund III.