University of Oxford Innovation Fund VI

This is the sixth iteration of the University of Oxford Innovation Fund, a partnership between Parkwalk Advisors and the University of Oxford, and the first time it has raised funds in five years. 

The fund was set up to allow Oxford alumni and investors to invest in EIS-qualifying start-up and early-stage science and technology companies from the University of Oxford. 

Oxford has topped the Times Higher Education World University Rankings for the past seven years, and is the UK’s largest research-led university. Its start-ups attracted over £953 million of external investment in 2022 alone. Last year it spun out 15 companies across fields as varied as optical neural networks and machine learning algorithms for quantum computers.

Previous iterations of the fund have invested £9.4 million in 25 companies – three of which have since achieved profitable exits, whilst eight were exited below cost, realising total proceeds of £4.0 million. The remaining unrealised portfolio is valued at £9.5 million (June 2023).

The manager

This fund is managed by Parkwalk Advisors (“Parkwalk”). Oxford University Innovation Limited (OUI) acts as an advisor to the Fund’s investment committee. 

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 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 (December 2022) and a market capitalisation of £587 million (May 2023).

IP Group has also acquired Touchstone Innovations, which was set up to invest in promising technology companies spun out of Imperial College and University College London.

Oxford University Innovation (OUI)

Oxford University is the largest research-based university in the UK and a global leader in innovation. Oxford University Innovation (OUI) was established in 1987 to help commercialise that research and remains a wholly owned subsidiary of the University.

Since its launch, OUI has created over 300 new companies, 11 of which are currently listed in London and New York. In 2022, OUI spinouts raised nearly £1 billion in external funding, bringing the total since 2010 to over £6 billion.

OUI offers a full range of services for prospective spinouts, including patent management, deal negotiations, technology marketing and operations. On average, OUI files more than one patent application each week with nearly 5,000 listed in total. In 2022 it granted over 1,000 licences for its technologies. 

As an advisor to the investment committee, OUI will source and evaluate appropriate opportunities for the fund, as well as supporting the commercialisation of any spinouts.

Investment strategy

The fund looks to invest in five to seven opportunities presented by OUI – both new and follow-on investments.

These will typically be science or technology companies commercialising research from the university – although companies not directly linked to the university may also be considered. 

To offer some diversification, Parkwalk aims to invest in a spread of sectors, including the government’s “five technologies of tomorrow”: quantum computing, AI, engineering biology, semiconductors and future telecoms. Previous funds have invested in companies developing vaccine, robotics, and energy generation technologies.

Most deals are expected to be EIS qualifying; however, there could be some exposure to SEIS. Historically, the funds have been split approximately 90% EIS and 10% SEIS, although this is not guaranteed.

The fund may invest alongside other university-controlled funds in addition to seeking grant funding from suitable institutions. There is no restriction on the amount that can be invested into any one investment.

Portfolio

The companies described here are from previous iterations of the fund and may not be included in the Fund VI portfolio. They are outlined to give a flavour of the types of companies an investor might expect.

Oxford Endovascular

Oxford Innovation Fund IV (and University of Oxford Isis fund ii) invested in Oxford Endovascular, which has created a new treatment for patients with brain aneurysms. A brain aneurysm is a bulge that forms in the blood vessel of the brain that could lead to severe health issues and possibly death.

Almost a third of patients who develop aneurysms cannot be treated with current technologies. Oxford Endovascular’s patented design uses a small ‘mesh’ of metal to create a faux blood vessel, allowing blood to be diverted away from any damage so the aneurysm can heal.

The company raised £2 million through OUI, Oxford Sciences Innovation PLC and private investors in 2015. Since then the company has raised a further £2.5 million in 2018 and $10 million in 2021 to fund the clinical studies.

BibliU

College students often struggle with the exorbitant cost of textbooks, with many turning to second-hand, rented or even pirated copies. Book publishers increase prices to cover the lost revenue, resulting in a vicious cycle of rising prices. 

To address this, former Oxford student, CEO Dave Sherwood, started BibliU in the University of Oxford’s Startup Incubator: a digital learning platform that makes textbooks and course materials accessible and cost-effective. 

The company sells to universities and colleges through a mix of subscription, licence and SaaS revenues paid annually or biannually in advance. Around two million students use BibliU to access materials from 2,000+ academic publishers, including global giants such as Pearson, McGraw-Hill Education and Macmillan.

The University of Oxford Innovation Funds first backed the business in 2017. In June 2022, BibliU raised $15 million from investors including Guinness Ventures and Wealth Club, which valued the business at £46 million (pre-money).

The University of Oxford Innovation Funds have realised a portion of their investment in the company at an uplift to cost. Past performance is not a guide to the future.

Refeyn (example of previous exit)

Identifying and measuring protein molecules is an integral part of life sciences research, particularly in the development of new medicines. Refeyn is commercialising disruptive technology that uses light to measure a molecule’s mass (mass photometry), cutting time and costs compared to existing techniques.

The technology proved particularly valuable in Covid-19 research, overcoming some of the problems in analysing SARS CoV-2 spike (S) protein. Refeyn has now launched an industrial version of its mass photometry instrument and a gene therapy focused product. 

Parkwalk first invested into the company through the Oxford Innovation IV Fund in 2018, with both the university and OUI participating in subsequent funding rounds. The Oxford University Innovation Funds sold their holdings for a 10.3x return in September 2022. Past performance is not a guide to the future.

Theysay (example of previous failure)

As is to be expected, not all investments have worked out. Theysay is one example. A spinoff from the Department of Computer Science, Theysay developed advanced language processing software for real-time sentiment analysis. The technology could be used to measure the opinions, mood and intent of customers, enabling businesses to handle feedback and identify trends more effectively.

The company originally received £500,000 in funding from IP Group in 2012 and £1 million from Parkwalk in 2014. However, after slower than hoped commercial progress, the company was acquired by Aptean, a leading software provider, in 2018. This sale generated a loss for the fund. 

Performance

The Oxford funds have a track record of returning cash to investors, although past performance is not a guide to the future.

The previous five iterations of the fund have invested £9.4 million in 25 companies across 42 investments. The funds have since exited 11 companies (three above cost), with total realised proceeds of £4.0 million and a remaining portfolio balance of £9.5 million (June 2023). 

The chart below shows the average performance of the total subscribed into the funds in each full tax year from 2012/13 (or from when the current strategy was adopted if later) to 2022/23. The 2018/19 fund is the most recent previous iteration. 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 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/SEIS 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/SEIS 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 holding period; equally, an exit within three years could impact tax relief. 

To claim tax relief, you will need EIS3/SEIS3 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/SEIS-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. 

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 University of Oxford Innovation Fund provides investors with the opportunity to invest in a portfolio of five to seven EIS-qualifying technology and science companies emanating from one of the world’s leading universities. 

The longstanding collaboration between Parkwalk and Oxford University Innovation allows the fund access to opportunities other managers might be hard-pressed to replicate. Previous funds have invested in some of the University’s most promising spinouts and earlier investors have had some notable successes (see Refeyn above). Please note, past performance is no guide to the future and there have also been failures. 

In our view, this is a high-quality EIS fund within an exciting and hard to reach sector. However, many of the investments are very early stage, making it a higher-risk option and investors should expect to hold investments for longer than the minimum three years required to qualify for EIS relief. 

The prospect of having preferred access to deal flow from the University of Oxford might appeal to investors looking to complement a wider investment portfolio, where gaining exposure to university spinouts can be 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.