Dear , 

Happy New Year.

2014 was an interesting year for UK University spin-outs as an asset class. Over $500m was raised in the UK last year by four fund managers and institutions, taking their listed valuations to over $4bn. University spin-outs becoming mainstream?

In the sector, highlights included IP Group raising $165m at nearly 2 times NAV; Allied Minds listing in London at a $670m valuation (at potentially 3 or 4 times NAV); Imperial Innovations raising $250m at nearly twice NAV; and Mercia raising $110m.  

These fund raises were backed by the likes of Woodford, Invesco Perpetual, Landsdowne and Baillie Gifford and this new money should make for better funded spin-outs at all stages, giving them higher chances of success.

As the largest EIS investor in this sector, generally co-investing alongside these institutions, Parkwalk made over 20 new or follow-on investments in 2014 and doubled our assets under management.

We achieved a near 10 times exit after just three years in Tracsis and a near 5 times exit in just under four years from Xeros. These exits mean Parkwalk UK Tech Funds I & II have both returned, in cash, more to investors than the total cost of their subscriptions into each Fund.

Funds I-II are currently valued at 2.60x cost including tax reliefs and fees (our Funds that are past the three-year minimum holding period for EIS).

Also in 2014 the University of Oxford Isis Fund I and University of Cambridge Enterprise Fund III were both over-subscribed, and Fund V and the Opportunities EIS Fund both raised record amounts.

The portfolio has grown to 34 companies and we have a robust deal flow for 2015.

So interestingly, whilst large institutions appear prepared to invest in this space at or above 2 times NAV, Parkwalk investors can participate in the same asset class through the Parkwalk EIS Funds at a 30% discount to NAV and CGT-free.
More detail can be seen on our website at www.parkwalkadvisors.com.

We would like to thank all our investors, colleagues and friends for their support in 2014 and wish you a healthy, happy and prosperous 2015.