Imperial College Enterprise Fund II

Imperial College is one of the most renowned universities in the world and a global leader in research. 

In 1986, the university launched its own dedicated technology transfer office to provide investment support for its academic talent. Since then, hundreds of startups have been formed at Imperial College with more than 200 in the last five years alone, attracting close to £500 million in external capital and supporting the creation of over 1,300 new jobs.  

Imperial College partnered with spinout-specialist Parkwalk Advisors to launch its first dedicated EIS fund in 2020, raising over £2 million. Now, Imperial is launching its second fund for which Wealth Club has secured an exclusive allocation of £500k. Wealth Club is the only non-advised broker to offer this.

Highlights

• Combined portfolio of spinout and startup companies
• Exclusive deal flow from Imperial College
• Aims to offer investors a portfolio of 6-14 companies, not guaranteed
  
• Aims to deploy funds within 12-18 months
• Minimum investment £25,000

The manager

The fund is managed by Parkwalk Advisors (‘Parkwalk’) and Imperial College Innovations Limited (“ICI”) will act as the portfolio advisor.

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

Parkwalk

Parkwalk is an experienced and award-winning EIS fund manager. Founded by Alistair Kilgour and Moray Wright, it is the UK’s most active investor in the university spinout technologies sector. This has been achieved through its relationships with UK Russell Group Universities and increased resourcing after its merger with IP Group, a leading IP commercialisation company, in 2017. The companies in which it has invested have raised over £1 billion in fundraising since 2010.

Imperial College Innovations

Imperial College can trace its roots back to 1823 and is one of the world’s top-rated universities, particularly in research and innovation. Like many other institutions, Imperial College founded its own technology transfer office, known as Imperial Innovations, to help convert its most promising research into viable commercial opportunities.

Launched in 1986, Imperial Innovations was originally a department within the university before becoming a wholly owned subsidiary of Imperial College. In 2006 the company listed on AIM and broadened its investment scope to include institutes within the ‘Golden Triangle’, an area comprising London, Oxford, and Cambridge. To better reflect this change in strategy, the company was rebranded as Touchstone Innovations. Touchstone was acquired by IP Group, which retained the investments.

The Technology Transfer Office (TTO) returned to the College in 2019 and was named Imperial College Innovations (ICI). Parkwalk is working with the TTO on this fund.

Currently, ICI is led by Dr Neil Simrick and Dr Brijesh Roy. Dr Simrick is responsible for startup formation while Dr Roy will focus on seed investments. The pair will be supported by ICI’s advisory committee of 11. This committee covers a wide range of skills and experience to help give oversight of the Fund and to complement the knowledge within ICI. The committee includes individuals such as  Brent Hoberman (co-founder of lastminute.com), Dr Iris Good (20 years in entrepreneurship and technology innovation), Dr John Burt (CEO at Medherant) and Alice Bentinck MBE (co-founder of Entrepreneur First and Code First: Girls). Together they will make investment recommendations to Parkwalk.

Investment strategy

This is the second iteration of the fund and it will follow a similar investment strategy as Parkwalk's other university funds.

With spinout opportunities, Parkwalk aims to fill a funding gap between early-stage invention funding and later-stage venture capital rounds. Arguably the most important factor for any company under consideration is the strength of its IP as well as a valid market opportunity. Parkwalk will be looking for committed founders it believes can identify clear routes to commercialisation and build teams capable of driving the business.

The fund is expected to cover a range of sectors with an emphasis on Imperial College’s specialities in deep science and technology. ICI will source these deals from its wide network of staff, students and alumni – it is expected that over 100 new ideas will be reviewed each year. Furthermore, the fund aims to provide a blend of EIS and SEIS opportunities, so will consider early-stage startup companies together with later-stage follow-on companies.

ICI will act as the first point of contact for any prospective companies. Its role will be to review, develop and support opportunities into commercial proposals before presenting them to the investment committees.

Once a company has received investment, it will have access to ICI’s extensive support service. Founders will be assisted with securing IP protection, identifying sources of follow-on funding and have the benefit of numerous facilities and programmes Imperial has introduced to support young companies. Furthermore, companies may also benefit from Parkwalk’s position as the most active investor into UK university spinouts.

Target return

The manager has not specified a target return.

Exit strategy

Both Parkwalk and Imperial College will assist investee companies with facilitating exit opportunities. Parkwalk seeks to exit investments through trade sales, secondary sales, listing investee companies on AIM (or other appropriate markets) or potential sales to other Parkwalk managed funds but exits are not guaranteed.

It should be noted that an investee company listing will not necessarily constitute an exit, as Parkwalk may elect to continue to hold shares therein rather than selling down part or all of any shareholding.

The intention is to realise investments at an appropriate time after the required three-year minimum holding period. Parkwalk anticipates a target holding period of four to eight years although it could take longer.

Portfolio

To date, the fund has made five investments totalling approximately  £1.3 million. While the portfolio is still limited both Parkwalk and ICI have a history of investing in spinout opportunities and have previously co-invested on six investments through Parkwalk’s Opportunity EIS Fund.

The fund will target a portfolio of 6-14 companies, with deployment expected to take place over 12-18 months, not guaranteed. The portfolio will be split between startup companies and later-stage follow-on investments. This should create a blend of EIS and SEIS-qualifying companies. Although Parkwalk will seek to create a varied portfolio of investments, it will not restrict the amount that can be invested into any one investment or type of investment.

Below are examples of spinouts from Imperial College in which Parkwalk previously invested. 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. 

Fresh Check

Fresh Check has developed a simple method for confirming food safety and cleanliness.

Fresh Check’s colour-change spray starts out purple and then changes to other colours to warn against dangerous levels of bacterial or chemical contamination on a surface. The spray is cost-effective and easy to use compared to the market standard swab testing which requires professional training and an expensive reader device.

The company initially joined Imperial’s Venture Catalyst Challenge in 2015 before moving to its Advanced Hackspace to complete early-stage development work. Funding and mentorship from these programmes helped the company take key steps, including filing a patent for its core technology. 

In 2021, the fund invested £250,000 in the company as part of a £625,000 seed round, alongside Peter Norris, Chair of the Virgin Group, who will join the board as Chairperson.

Charco Neurotech

Named after famed neurologist Jean-Martin Charcot, Charco Neurotech has designed a wearable device that helps reduce the symptoms of Parkinson’s disease.

Its founder, Lucy Jung, began the project as part of her Design Engineering Master's degree. She was joined by her co-founder, Dr Floyd Pierres, and together they began researching the benefits of stimulation for Parkinson’s therapy.

In 2019, along with participants from Parkinson’s UK, the company was able to develop its first prototype, CUE1. The device, which is roughly the size of a pebble, works by delivering gentle vibrations to the peripheral nervous system. Pilot tests reported an average improvement of 16% in movement tasks, easing the typical stiffness and slowness symptoms associated with Parkinson’s. The company has also developed a companion app that sends medicine reminders and tracks symptom progression and quality of life measures. 

The fund has invested £205,000 into the company to support the development of CUE1 as part of a £500,000 seed round. In addition to this, the company has also secured more than £200,000 in grants, prizes, and invested funds raised by the Royal College of Art.

Ceres Power (example of previous exit)

Ceres Power was a co-investment between ICI and Parkwalk. it has been included as an exit example because the investment was made using broadly the same mandate as this fund.

Ceres Power spun out of Imperial College over 19 years ago and has subsequently gone on to become the UK’s most valuable cleantech company, valued at over £600 million (January 2020).

The company has developed fuel cells, a type of device that produces electricity from substances such as natural gas and hydrogen, with relatively low or zero carbon emissions. Where Ceres differentiates itself is its unique combination of advanced materials which provides high levels of efficiency at a lower cost. Furthermore, the flexibility of the design means the cells can be used industrially, domestically and within vehicles.

Parkwalk first invested in October 2016 as part of a £20 million funding round to help the company make substantial commercial and technical progress. In just over three years, the company was exited generating a return of 2.4x for Parkwalk investors (not including initial tax relief).

OxSyBio Limited (example of previous failure)

As this is a new fund, there have been no failures so far. However, ICI and Parkwalk have both made a significant number of previous spinout investments and not all will have been successful. One such example is OxSyBio, however, please note that the company was a Parkwalk investment, ICI was not involved in the deal.

OxSyBio was a novel synthetic biology company, in which Parkwalk invested in February 2018. The company was developing 3D printing tools for drug discovery and diagnosis, based on research conducted by Professor Hagan Bayley at the Chemistry Department at the University of Oxford and co-founder of Oxford Nanopore, the successful UK-based DNA sequencing company.

OxSyBio raised substantial funding from a group of institutional investors including Parkwalk, which was a minority investor. The funding round had several ‘hard’ targets to achieve to enable the next tranche to be funded. Unfortunately, the targets were not met and investors did not continue to support the company.

Performance

There is no performance data for the fund yet. However, the graph below shows historic performance to 1 October 2021 across all investments made through all Parkwalk EIS funds per tax year (this includes the other three university funds). 

The chart below shows the average performance of the total subscribed into the fund each tax year, based on valuations as at 1 October 2021, expressed on a £100 invested basis for the previous ten tax years Please note, individual investor portfolios’ performance will deviate from the average.

Performance across all Parkwalk EIS investments made per 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 so should only form part of a balanced portfolio and you should not invest money you cannot afford to lose. They also tend to be illiquid and hard to sell and value. Before you invest, please carefully read the Risks and Commitments and the offer documents to ensure you fully understand the risks. 

Tax rules can change and benefits depend on circumstances.

This EIS fund invests in early-stage businesses which are more likely to fail than larger ones. So you should expect a number of failures in the portfolio, or even be prepared for all companies to fail.

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.

Timing of the offer

Parkwalk aims to deploy the money within 12 to 18 months from investment. Historically, the average has been within 12 months, but there are no guarantees this will continue to be the case. As is typical with EIS and SEIS investments, it may not be possible to have all funds deployed before a deadline such as the end of the tax year.

Our view

This is the second EIS fund to be launched by the collaboration between Parkwalk Advisors and Imperial College Innovations. There is a clearly defined investment strategy: few EIS managers have more experience in university spinouts than Parkwalk. In fact, Parkwalk has already successfully rolled this strategy out to three other world-leading universities (Oxford, Cambridge and Bristol) and deployment of the first Imperial fund is well underway. Imperial College Innovations adds substantial resources and expertise. This offer might be appealing to investors looking to complement a wider investment portfolio, where gaining exposure to university spinouts might be more challenging. 

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.