Parkwalk Opportunities EIS Fund

The Parkwalk Opportunities EIS Fund is managed by Parkwalk Advisors (“Parkwalk”), one of the UK's most active investors in university spinouts. Parkwalk has strong ties to the UK’s leading universities, managing funds in conjunction with the tech-transfer departments of the Universities of Cambridge, Oxford, Imperial College, and Bristol. These partnerships could provide investors with unique access to the spinout sector.

Parkwalk has more than £400 million of assets under management and benefits from being part of IP Group plc, a FTSE 250-listed asset manager focused on intellectual property commercialisation. 

To date, Parkwalk has invested in 163 companies and achieved 54 full and partial exits, 19 of which were profitable with exit multiples ranging from 1.1x to 16x, although past performance is not a guide to the future. 

• Aims to be fully invested within 12 to 18 months, not guaranteed
• Target return is unspecified 
• Estimated holding period of four to eight years, not guaranteedc
• Target portfolio size of at least eight companies
• Minimum investment of £25,000 – you can apply online 

The manager

Parkwalk Advisors is a specialist university spinout investor with more than £400 million assets under management. It was founded in 2009 and in 2017 acquired by IP Group, a leading intellectual property commercialisation company with net assets of £1.4 billion (June 2022) and a market capitalisation of c.£625 million (April 2023). IP Group also acquired Touchstone Innovations, which was set up to invest in promising technology companies spun out of Imperial College and University College London. 

The combined group gives Parkwalk a strong hand when accessing deal flow and negotiating terms, as well as providing a possible exit route for investors. 

The investment committee consists of nine investment professionals including founders Moray Wright and Alastair Kilgour. The team has experience across banking, fund management, start-ups, venture capital, and drug development.

Before your subscription is invested, the cash will be held by the custodian, Mainspring Nominees Limited. After investment, shares will be held by the nominee, MNL (Parkwalk) Nominees Limited. 

Investment strategy

Parkwalk’s niche is UK university spinouts. It invests in technology or intellectual property developed by UK universities, helping inventors and the universities themselves to commercialise their research.

Parkwalk’s portfolio companies include spinouts from 20 universities across the UK. In addition to the Opportunities EIS fund, Parkwalk manages funds in conjunction with the technology transfer departments of the University of Cambridge, the University of Oxford, Imperial College and the University of Bristol. Parkwalk typically co-invests alongside large investors, including (in alphabetical order) Amadeus, Cambridge Innovation Capital, Invesco Perpetual, Oxford Sciences Innovation and Schroders.

Parkwalk generally first invests in a company at the stage where its technology has been proven, but products have yet to be sold, and well before commercialisation. A typical initial investment is £1 million to £1.5 million for a 15–20% stake in a business. Later investments may be £2 million to £20 million, usually as part of a larger funding round.

Investee companies will typically have deeply embedded IP and are given the freedom to operate. Parkwalk will usually seek experienced, relevant management with the skills necessary to commercialise the product. However, investee companies don’t always have to be early stage. Parkwalk will also invest in later-stage companies, perhaps just before an AIM listing.

While the fund's target return is unspecified, Parkwalk seeks companies it believes could potentially deliver five times the original investment – not guaranteed.

Portfolio

Each investor is expected to have a portfolio of at least eight early-stage, EIS qualifying, technology companies, with a mix of different technologies and stages of maturity (from Series A to Series C), although this is not guaranteed. 

Since launch, Parkwalk has invested in 163 companies. The current portfolio is weighted towards Digital Health & MedTech, Hardware and AI, Big Data & Software.

Top 10 sector breakdown by investment cost (%)

Below are portfolio company examples from previous iterations of the EIS fund. They are outlined to give a flavour of the types of companies you might expect but are unlikely to be part of a new investor's portfolio. 

Bramble Energy – spinout from UCL and Imperial College London

Bramble Energy was founded in 2015 by UCL Engineers Dr Tom Mason and Dr Vidal Bharath. 

The company has designed and built a new hydrogen fuel cell. Its Printed Circuit Board Fuel Cell (PCBFC) requires fewer components than a traditional fuel cell and draws on established manufacturing supply chains. That means PCBFCs are easier to manufacture at scale and cheaper to the end user, making hydrogen a viable alternative fuel. 

The technology could be particularly useful in areas like light commercial vehicles fleets, where maintaining high levels of utilisation is key making long charging periods for electric vehicles impractical. However, the company is also looking to expand into the portable energy sector, where batteries have struggled to challenge the traditional dominance of diesel generators for long-term deployments.

Parkwalk first invested in the business in 2018, following on in subsequent rounds, the most recent of which saw the firm raise £40 million from a group of investors that included Parkwalk parent IP Group, BGF and HydrogenOne Capital. 

MoA Technology – spinout from Oxford University

It’s estimated approximately 40% of global crop yields would be lost without effective herbicide controls. Despite this need, no new major herbicide has been introduced to the market in the last thirty years, leading to over-reliance on a small number of products and growing levels of weed resistance.

The crux of the issue is identifying new modes of action (MoA – the way the herbicide kills the weed). For this purpose, MoA Technology has developed its own discovery platform which can identify new herbicide targets 6x faster than the industry standard. Target candidates are then screened against miniaturized whole plants to ensure the chemistry works under real-world farm conditions and is environmentally safe. 

MoA Technology spun out of Oxford University in 2018 and secured £6.3 million in initial funding from Oxford Sciences Innovation and Parkwalk. It has since opened a second research facility, allowing it to screen candidates in state-of-the-art glasshouses and its 75-hectare site of arable land. In 2022, the company secured a $44 million Series B funding round led by Lansdowne Partners, Oxford Science Enterprises, and Parkwalk. The investment will be used to advance the most promising leads through to the next stage of development. 

YASA – spinout from Oxford University (example of previous exit)

YASA develops revolutionary compact, lightweight and powerful electric motors and controllers. The products enable vehicle hybridisation and electrification, especially where there is limited powertrain space. 

The company supplies custom and off-the-shelf e-motors and controllers to automotive customers from its Oxford headquarters. YASA is a Ferrari Strategic Technology Partner and has supplied a custom electric motor for Ferrari’s first hybrid vehicle, the SF90 Stradale. The same core motor is planned for the F171, to be launched in 2021. YASA is also entering the aviation market and has partnered with Rolls Royce to break the speed record for electric flight.

Parkwalk first invested in YASA through a £1.8 million Series A funding round in August 2012 at a £5.7 million pre-money valuation. Since then, Parkwalk has supported the business through further funding rounds, most recently in August 2019, at a pre-money valuation of £72.5 million. 

In July 2021 Parkwalk announced that YASA had been acquired by Mercedes-Benz. The sale delivered returns of between 2x to 6x, depending on the round, and returned £45m to Parkwalk investors. Past performance is not a guide to the future.

Tangentix Limited (example of previous failure)

As can be expected, not all investments work out. One example is Tangentix. Tangentix had a patented technology enabling delivery of game downloads in a more timely and cost-effective manner. The company was based on mathematical research from the University of Bradford. Tangentix raised substantial funding over various funding rounds (2013 to 2018) but struggled to gain commercial traction.

In late 2018 the company changed strategy, aiming to become an independent platform for video games (a ‘Netflix’ or ‘Spotify’ equivalent). Unfortunately, it did not have nor could it raise sufficient cash to allow the new product to be launched, and the company entered voluntary liquidation resulting in a loss to investors.

Performance

To date, the Parkwalk EIS funds have achieved 54 full or partial exits, 19 of which have been profitable. The positive exits have helped drive a strong track record of returning cash to investors, although past performance is not a guide to the future.

The chart below shows the average performance of the total subscribed into the funds each in each full tax year from 2012/13 (or from when the current strategy was adopted if later) to 2021/22. The chart is based on the latest valuations provided by the manager, expressed on a £100 invested basis. Please note, individual investor portfolios’ performance will deviate from the average.

Performance of Parkwalk EIS funds per £100 invested in each tax year

Risks – important

This, like all investments available through Wealth Club, is only for experienced investors happy to make their own investment decisions without advice. 

EIS investments are high-risk and should only form part of a balanced portfolio. As must be expected with early-stage investments, some or even all of the companies in the portfolio could fail: the fewer the companies included in the portfolio, the higher the risk of loss if things don’t go to plan. You should not invest money you cannot afford to lose.

There is no ready market for unlisted EIS shares: they are illiquid and hard to sell and value. There will need to be an exit for you to receive a realised return on your investment. Exits are likely to take considerably longer than the three-year minimum EIS holding period; equally, an exit within three years could impact tax relief.

To claim tax relief, you will need EIS3 certificates, normally issued once shares have been allotted. This can take several months: please check the deployment timescales carefully. Tax reliefs depend on the portfolio companies maintaining their EIS-qualifying status. Remember, tax rules can change and benefits depend on circumstances.

Before you invest, please carefully read the Risks and Commitments and the offer documents to ensure you fully understand the risks. 

The manager believes that if a company fails, the intellectual property it owns could still have some resale value, but there are no guarantees. 

Charges

A summary of the main charges and savings is shown below. Some of these will be payable by the investor, whilst others by the investee companies. The investment may have additional charges and expenses: please see the provider documents, including the Key Information Document, for more details.

Our view

The Parkwalk EIS fund has a clear investment strategy in a defined area: university spinouts. Its investments stretch from artificial intelligence for autonomous vehicles, to the world’s most efficient solar cells and electric motors being used by Ferrari. 

The investment team has plenty of experience in this field, and Parkwalk’s standing in the industry could allow access to opportunities other managers would be hard pressed to access. Investors have historically been well rewarded for supporting this high-risk area of the market, although past performance is not a guide to the future.

Parkwalk’s links to the UK’s leading universities and large institutional investors, such as parent company IP Group Plc., set it apart from many other EIS funds. These could provide investee companies with access to the pools of liquidity needed to commercialise their intellectual property, and potentially provide EIS investors with an additional route to exit although this is not guaranteed. 

In our view, this is a high-quality EIS fund within an exciting and hard-to-reach sector. However, the focus on intellectual property means these investments are typically very early stage and high risk.

Wealth Club aims to make it easier for experienced investors to find information on – and apply for – investments. You should base your investment decision on the offer documents and ensure you have read and fully understand them before investing. The information on this webpage is a marketing communication. It is not advice or a personal or research recommendation to buy any of the investments mentioned, nor does it include any opinion as to the present or future value or price of these investments. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination.