The UK has a thriving spinout ecosystem. Innovative technologies cultivated in academia have gone on to raise millions in capital and exit in blockbuster IPOs. But who is the most active investor in UK university spinouts?
According to a recent report by data platform Beauhurst, that accolade is shared by London-based Parkwalk Advisors and Scottish Enterprise, a government body.
Each organisation made 31 equity investments into UK spinouts in 2021.
Among Parkwalk’s spinout investments was its participation in a £34.5m round for University of Cambridge therapeutics startup PhoreMost. It also invested in the University of Oxford diagnostics spinout Brainomix’s £17m funding round.
Founded in 2009, Parkwalk was set up by Moray Wright, CEO, and its chief investment officer Alastair Kilgour. Each of them previously worked at financial services firm Lazard, where they both personally invested in spinouts.
“That sort of worked… they weren’t fantastic but we were I guess slightly dopey angel investors,” Wright tells UKTN.
The pair launched Parkwalk to democratise access to spinouts, which Wright says was previously an opportunity limited to specialist venture capital firms.
‘Early-stage investing is difficult’
Parkwalk always invests as a syndicate investor, investing up to £20m into a single company. In total, it has invested £362m in more than 150 companies. The firm employs 23 people.
Alongside its own funds, Parkwalk also works with Cambridge, Oxford, Bristol and Imperial College universities to manage their own funds. If they prove successful and have a commercial application, Parkwalk will then invest from its larger funds into the spinouts.
“Early-stage investing is difficult,” says Wright. “You can be too early to market you can be too late to the market, you can have rubbish management. You’ve got to have a little bit of serendipity in there as well. So you need a few things to align for it all to work.”
Parkwalk is part of London-based intellectual property business IP Group, which is listed on the London Stock Exchange and invests in technology companies.
Better than bonds
Wright says that investing in spinouts provides an alternative to bonds and “other rubbish” with low returns for investors, a point underscored by current inflation levels.
But it’s the UK’s world-famous institutions, such as the University of Cambridge, that Wright says is the biggest draw, attracting people from all over the world to solve complex problems.
“I think it’d be quite nice if we could try and build some decent big companies here in the UK that can employ a lot of people and have a knock-on effect,” says Wright.
As part of his job, Wright is exposed to bleeding-edge technology. How does he decide whether to invest?
“You’ve got to be careful not to fall in love with a cool tech that’s just the most amazing thing I’ve ever seen. But if it hasn’t got a market it hasn’t got a market,” Wright says.
Parkwalk’s investments are all in academic spinouts, but the sectors that they hail from our wide-ranging: its portfolio includes startups operating in quantum computing, medtech, AI, agtech and many more.
It has also seen through many of its investments to exit, including Oxford-based electric engine company Yasa, which was acquired by German vehicle manufacturer Mercedes-Benz in July last year.
“It’s a bloody interesting job,” says Wright, “because we meet some fantastic people and you’re always the dumbest person in the room.”