The Wellcome Trust is set for a huge windfall from the hottest tech IPO of the year.
Snap's public offering, expected next week, will return around $100m (£80.3m) to the science institution following on from successful early bets on Facebook and Alibaba, among others.
It comes as the Los Angeles-based startup sought to woo European investors, bringing its IPO roadshow to London on Monday, led by co-founder and chief executive Evan Spiegel, who stands to become a billionaire at the age of just 26.
Pitching itself as a camera company in it roadshow material, the startup also announced on Monday it has made its first hardware product, Spectacles, available to buy in the US for the first time. Priced at $129.99, the sunglasses film short blasts of video from wearers viewpoints and initially launched via pop-up vending machines in different locations across the States building hype around the device.
But, the startup didn't demonstrate the device in the pitch to investors in the capital, focusing instead on advertising, Reuters reports.
Snap, which initially rose to popularity from the Snapchat messaging app, last week said it plans to price its listing at the lower end of expectation in documents filed with the SEC: between $14 and $16 per share, generating up to $2.3bn and valuing the company at between $20bn and $25bn.
Selling itself as a hardware company may be more difficult even than attempting to follow in the footsteps of Facebook's advertising monster. Ad revenue numbers are more on par with Twitter than Facebook while cash generated from Spectacles was deemed "not material" in its IPO filing.
“Investors might wish to see more progress on user growth and advertising revenue before buying the shares at a staggering valuation of around 46 times the company’s revenue," said John Colley, professor at Warwick Business School.
"Timing is everything with market floats, and growth at Snapchat is slowing. While markets are high, the timing seems curious, as Snap has costs of $634m and sales revenue from advertising of $463m, according to its filing."
It was also revealed over the weekend that one of the firm's top advertising technology executives, Sriram Krishnan, has left the Los Angeles-based company in a badly timed departure.
In addition to questions surrounding growth and revenue, the attractiveness of Snap to investors is also likely to be dampened by the lack of voting rights, which will be retained by its founders.
Aviva Investors global equity fund manager Richard Saldanha warned investors should "tread with caution" and that it would be a "major concern for me from a governance perspective", while Head of Royal London Asset Mangement, Mike Fox, said it was a "major red flag" and would not be taking part in the IPO.
"In effect, investors will have no voice, and in the tech sector will be unlikely to ever see dividends," added Colley. "The founders want almost complete freedom to spend investors’ money as they see fit and without consequences. In such circumstances investors do not know what they are investing in.”
However, some investors were less cautious, likening Snapchat's "cocktail of hype, insane valuations, dubious fundamentals and weak governance" to that of Google or Facebook when they first listed, according to Geir Lode, head of global equities at Hermes Investment Management.
Read more: It looks like Snapchat will IPO on the NYSE
"For tech companies early in their lifecycle the weak governance structure is fairly typical, and even with those concerns subsequent shareholder returns have often been stellar," he told Reuters.
Wellcome Trust, Britain's biggest charity which invested in Snapchat via an unnamed venture capital fund, has a £265m stake in Chinese giant Alibaba, its fourth largest private equity holding. It cited a return on cost from its initial investment of 298 per cent, according to its annual report published in September 2016. Its holding in Facebook stands at £233m, with returns on cost of 193 per cent.
Its investment in Twitter initially brought it a windfall of $100m after its IPO in 2013, however, a slump in its share price last year saw it slip out of the charity's list of private equity holdings valued at more than $150m, compared to a value of £124m in 2015.
In total the endowment fund, which has £20bn of assets under management and typically holds investments for a decade, generated annual returns of 18.8 per cent last year.