Asked by: Caitlin Anderson, Tewkesbury
There are two basic types of stem cell - those found in the developing embryo, and those found in much smaller numbers in adults.
Those from the umbilical cord are hematopoietic (in other words, blood-forming) cells, similar to those found in adults, but less mature and more able to develop into other types - hence their value.
Subscribe to BBC Focus magazine for fascinating new Q&As every month and follow @sciencefocusQA on Twitter for your daily dose of fun science facts.