Meet the manager behind Parkwalk Opportunities EIS

4 March 2019, 9:00am

We spoke to Tom Hopkins at leading EIS manager Parkwalk to find out more about their experience, investment strategy, sourcing deal flow and more.

Tell us about the fund and why it was started?

Parkwalk was founded in 2009 after the founders noticed a gap in the market to provide funding to companies that were seeking to commercialise technology that had spun out of UK universities. UK universities receive c. £6bn of UK taxpayer money every year for R&D, and as a result the UK is a world leader in R&D and innovation. When technology is spun out into a company, having been incubated in the university for a number of years, the firm has IP backing and freedom to operate. These are unlike normal start-ups, and yet back in 2009 there were few people prepared to back these companies, hence Parkwalk was set up.

How experienced is your team?

Parkwalk has now invested in over 100 spin-out companies, with the Global University Venturing organisation recently announcing Parkwalk as the world’s second most active investor in this sector 2013-17. We have £220m assets under management. Our team have a broad range of experience and skills across entrepreneurial start-ups, venture capital, finance and multinational corporations. In 2017 Parkwalk joined forces with IP Group plc, a FTSE 250 company listed on the Main Market of the London Stock Exchange. IP Group is one of the UK’s leading intellectual property commercialisation companies, creating and developing companies primarily based on fundamental scientific innovations from its research-intensive partner universities.

What is your investment strategy focused on?

Parkwalk Opportunities EIS Fund invests in ‘knowledge intensive’ companies patent protected intellectual property (IP) that have spun-out from a UK university or research institution. The Fund enjoys strong deal flow from Parkwalk, and IP Group’s, key relationships with top UK universities. The team also manages a number of university-specific funds for Oxford, Cambridge and Bristol which provide proprietary deal flow to the Parkwalk Opportunities EIS Fund. Parkwalk aims to invest alongside institutional investors on each deal, which have sector expertise and the ability to provide additional follow on funding. In order to manage risk, each investor will get a diverse portfolio of 5 investments ranging from AIM or pre-IPO businesses, to earlier stage university spin-outs across the maturity spread and differing technology sectors.

What 3 things do you look for in a business?

In terms of the asset class it is important to note that there is a large filtering process before any technology is spun out, and the technology might have been incubated with the university for a number of years and received large amounts of grant funding. Therefore the technology works and there is freedom to operate, ie there is patent protection around the Intellectual Property (IP). As well as patents, we focus on looking for impressive and capable management teams, whose research ideas have a clear route to commercialisation of the technology / IP.

Tell us about 3 investments or exits –

  • YASA (Oxford University) – For a given power and torque requirement, YASA can deliver smaller, lighter electric motors and controllers than competing technologies. Recently opened a new factory and hopeful of mass market take-up in next round of car design as OEMs push into electric vehicles. Also teaming up with Rolls-Royce to set world speed record for electric aircraft.
  • GeoSpock (Cambridge University) – Massive geospatial data handling and processing business. In a trial GeoSpock was capable of processing over 10 billion synaptic messages each second, at that time IBM’s Blue Gene project took two weeks to carry out a similar simulation. The business just raised £10m from GlobalBrains and CIC
  • Oxbotica (Oxford University) – Develops the software that makes vehicles autonomous, and doesn’t require GPS. Currently in trials with Addison Lee and also part of the DRIVEN consortium, an Innovate UK-backed research project, to bring driver less cars to London.

What have you got coming up in the deal flow pipeline?

We have over £30m currently in the deal pipeline and our team are conducting due diligence on several opportunities in sectors such as extreme data, pet medicines, graphene and med tech. In 2018, we held over 620 meetings with prospective and current portfolio companies and invested over £60m.

Have you had any exits and what is your track record?

At Parkwalk, we believe the best measure of performance is the quantum of cash returned to investors. We have a proven track record of returning cash back to investors, having had 19 exits to date and generated an IRR of 35%. We have also been recognised by the industry for our performance and were pleased to be awarded ‘Best EIS Fund’ both at the Investment Week Tax Efficiency Awards and also the EIS Association awards in 2018.

Deployment is important for investors, how quickly can you deploy funds and when do investors usually receive their tax certificates?

Our target is 12-18 months for full deployment from receiving the initial subscription, giving investors and advisers more visibility for their tax planning. Historically the average deployment time is less than 12 months. Investors will usually receive a portfolio of five investments – the first 2-3 months after subscription and then all done by month 12. EIS certificates follow shortly after each investment.

What happens in practical terms when an investor invests with you?

As soon as we receive an application, investors will receive a welcome email from the Share Centre, our custodian. Investors will also receive contract notes on each investment made and an email summarising each investment. We aim to send out EIS3 certificates in a timely manner, usually two to three months after each investment is made. Investors will receive bi-annual valuations and statements, and are welcome to contact the team for any additional commentary. Upon a realisation, investors will be contacted and can choose to receive a cheque or bank transfer, or reinvest into the fund.

In summary, what sets you apart from other EIS funds and why should investors invest with you?

  • Largest growth EIS Fund in the market by funds raised each of the last two tax years
  • One of the top rated EIS funds according to independent research firms
  • Clear investment strategy focusing on a distinct asset class
  • Manage risk by investing from seed to AIM listed businesses
  • Genuine proprietary deal flow via university funds and relationships resulting in quick deployment
  • Proven track record of delivering returns

If you would like to find out more please call the Kin Capital sales team on 020 3743 3100 or email advisers@kincapital.co.uk 

Please Note. EIS investment are high risk investments and are not suitable for all investors. Tax treatment is dependent on individual circumstances and may be subject to change in the future. Please see Kin Capital’s full risk warning here.

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