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IP Group, which is partnered with the Universities of Bath and Bristol, has led a financing round into a new company from Durham University.

The developer of intellectual property-based businesses said it had committed capital from both its balance sheet and its managed fund, the Finance for Business North East Technology Fund.

Durham Graphene Science (DGS), which was founded on research developed by Dr Karl Coleman who won the 2011 Royal Society of Chemistry's 'Chemistry World Entrepreneur of the Year', is developing production technology for a material that can be used across sectors including the automotive, aerospace, electronics and clean tech industries.

The material, Graphene, has exceptional and unsurpassed properties but IP Group said it had been "difficult and extremely costly to produce commercially to date".

IP Group and The North East Technology Fund have each committed £500,000 alongside £200,000 from the Finance for Business North East Proof of Concept Fund, managed by Northstar Ventures.

IP backs spin-out businesses from the University of Bath and the University of Bristol among others.

The financing has been committed in two equal tranches, with the second contingent on certain milestones being met. Assuming the second tranche completes, IP Group and The North East Technology Fund will have a 22 per cent stake in DGS.

"This is a great example of IP Group leveraging its core model through its managed funds," said IP Group chief executive Alan Aubrey.

"When we won the mandate to manage The North East Technology Fund in 2010, our vision was that the group would co-invest alongside the fund in appropriate opportunities. We are delighted that this has led to us making our first investment into a spin-out company from Durham University."

DGS has developed a patent protected process for synthesizing the material that creates graphene from carbon using sustainable cheap feed stocks. DGS said it will use the investment to scale up its production equipment and establish joint development agreements with partners.

"Graphene is a breakthrough advanced material that could change hundreds of the products we use in everyday life if this technology can be applied, as we think it can, across pretty much every sector," said DGS founder Dr Karl Coleman.

"Effectively the things we use will be stronger, lighter, more flexible, have increased performance and potentially be much cheaper to buy – it's that revolutionary.

"This is going to be a very competitive industry as interest in graphene has grown so we are working to a very aggressive timescale. The pilot production lines are already yielding some exciting results. From our very first discussion, the team at IP Group has been great to work with. Genuinely interested in our work, they have strengthened our knowledge and supported us in the recruitment of a wider team."