University of Cambridge Enterprise Fund X

This is the tenth University of Cambridge Enterprise EIS fund, a partnership between Parkwalk Advisors and Cambridge Enterprise, the commercialisation arm of the University of Cambridge. 

The fund offers Cambridge alumni and investors an opportunity to invest in early-stage science and technology companies as they spin out of Cambridge University, one of the world’s top universities. 

The fund has to date invested £22 million in 65 companies and achieved 18 full exits, generating proceeds of £11.7 million. A further £12.5 million could be due to investors, subject to the successful completion of earnouts. The remaining portfolio is currently valued at £36.6 million (September 2024).

• Aims to be fully invested within 12 to 24 months of the fund close, not guaranteed
  
• Minimum investment £25,000 – you can apply online
• The fund is seeking to raise of £3–4 million; £500k is exclusively available through Wealth Club 
• Next deadline: Discretionary

The manager

This fund is managed by Parkwalk Advisors. Cambridge Enterprise is the Portfolio Advisor.

Parkwalk Advisors

Parkwalk Advisors (“Parkwalk”) is a specialist university spinout investor with £482 million assets under management (June 2024). It was founded in 2009 and acquired by IP Group in 2017, a leading intellectual property commercialisation company. IP Group has net assets of £1.07 billion and a market capitalisation of £426 million (June 2024). IP Group also acquired Touchstone Innovations in 2017, which was set up to invest in promising technology companies spun out of Imperial College and University College London. 

Cambridge Enterprise

The University of Cambridge is a hub for research and innovation. The university has a pedigree spanning over 800 years and has been home to over 100 Nobel Prize winners and discoveries such as stem cell research and IVF. It is consistently ranked as one of the best universities in the world.

Part of the University itself, Cambridge Enterprise was launched in 2006 to help commercialise ideas and inventions developed within the university. As the portfolio advisor, Cambridge Enterprise will source and evaluate opportunities for the fund. 

To date, the University of Cambridge Enterprise Funds have raised £26.8 million and invested in 65 companies.

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

Investment strategy

The fund aims to invest in a portfolio of early-stage, high-growth – and hence very high risk – research-intensive companies spun out from the University of Cambridge and/or Cambridge-based research-intensive institutions or technology clusters.

Investee companies will be related to the University – founded by University staff, students or alumni or with a research or development link with the University. 

Companies are expected to offer the potential to transform society through new therapies, services and disruptive technology products within sectors such as healthcare, renewable energy, decarbonisation, clean water and nutrition.

Portfolio

The fund will aim to invest in a portfolio of 10-15 early-stage EIS-qualifying companies. 

The previous nine University of Cambridge Enterprise EIS funds have invested £22 million in 65 companies. The funds have a bias towards Hardware, Digital Health and Medtech, and Life Science sectors. The chart below shows the sector breakdown by investment cost.

Sector breakdown by investment cost (%)

Below are portfolio company examples from previous iterations of the fund. 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. 

Nyobolt

There is a global race to develop faster-charging batteries that are more powerful, lighter and durable.

Building on over a decade of research by Professor Dame Clare Grey FRS, Cambridge University spinout Nyobolt has developed high-power batteries with ultrafast charging times.

Its batteries can charge from 10% to 80% in under five minutes. By comparison, a Tesla supercharger takes 15-20 minutes to complete the same level of charge. Moreover, the technology significantly reduces battery degradation: Nyobolt’s batteries maintain over 80% capacity after 4,000 fast charge cycles, equivalent to 600,000 miles.

The company recently completed a track test with its EV sportscar prototype and is reportedly in discussions with several manufactures, aiming to integrate its technology into high-performance EVs.

The University of Cambridge Enterprise Fund first backed the business in September 2020. The business has since raised several follow-on funding rounds, including a £50 million Series B round in July 2022 at a £159 million pre-money valuation. The funding is expected to support the construction of its manufacturing and R&D facilities.

Sano Genetics 

According to Dr Patrick Stuart, co-founder of Sano Genetics, it still takes 10-15 years for new drugs to reach patients and many never make it out of R&D due to prohibitive R&D costs. 

Founded in 2017, Sano Genetics aims to accelerate the future of personalised medicine by making the R&D process much faster, more cost-effective, and a better experience for patients. 

Sano has developed a platform to help connect patients who have rare and chronic diseases with leading research and clinical trials, making patient recruitment faster and providing researchers with tools to analyse anonymous and aggregated data. 

It raised $11 million in February 2022 in a round led by Seedcamp and MMC, with participation from the University of Cambridge Enterprise EIS Fund. In January 2024, the business raised a further £9 million to integrate Large Language Models and other AI tools to its platform.

Versed AI – example of previous exit

Versed AI applies cutting-edge academic research to solve real-world supply chain problems. The technology used Natural Language Processing and Machine Learning to identify relationships between entities from text documents, mapping multi-tier supply chains, revealing patterns and missing links in supply chain networks. 

The University of Cambridge Enterprise Fund VII participated in an initial £1.2 million funding round in May 2021 alongside investment from Working Capital. 

In July 2024, US supply chain and risk management business Exiger acquired Versed AI. The details of the acquisition are undisclosed; however, investors received a profitable multiple of investment cost. Past performance is not a guide to the future.

JukeDeck (example of a previous failure) 

As to be expected, not all investments work out. One example is JukeDeck. JukeDeck aimed to bring artificial intelligence to music composition and production. 

The technology was very advanced but potentially ahead of its time as the market for royalty-free AI generated music had not grown sufficiently. JukeDeck managed to garner traction with early adopters but failed to become self-sustaining financially. Eventually, it accepted an offer from tech company ByteDance, the owner of TikTok, that allowed an orderly liquidation and transfer of its employees.

The company was backed by the University of Cambridge Enterprise Fund II. The orderly liquidation resulted in no return for equity investors.

Performance

The previous nine University of Cambridge Enterprise EIS funds have invested £22 million across 114 investments into 65 companies. The funds have since exited 18 of these investments, generating realised proceeds of £11.7 million, and a remaining portfolio balance of £36.6 million (September 2024). A further £12.5 million could be due to investors, subject to the successful completion of earnouts. 

The chart below shows the average performance of the total subscribed into each tax year, expressed on a £100 invested basis.

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 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 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 EIS holding period; equally, an exit within three years could impact tax relief.

To claim tax relief, you will need EIS3 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-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 Cambridge EIS fund provides investors with the opportunity to invest in a diversified portfolio of 10–15 early-stage technology companies emanating from one of the world’s leading universities. 

The longstanding collaboration between Parkwalk and Cambridge Enterprise may allow the fund access to opportunities other EIS managers would be hard-pressed to replicate. Previous University of Cambridge Enterprise EIS funds have invested in some of the University’s most promising spinouts and earlier investors have been well rewarded. Please note, past performance is no guide to the future. 

In our view, this is a high-quality EIS fund within an exciting and hard to reach sector. However, the focus on intellectual property means these investments are very early stage, so it is also high-risk. 

The prospect of investing in 10-15 early-stage, cutting-edge technology businesses might appeal to investors looking to complement a wider investment portfolio, where gaining exposure to university spinouts might be challenging. Additionally, the link with the University of Cambridge may appeal to investors who wish to invest alongside Cambridge Enterprise and value the discipline of specifically targeting opportunities within Cambridge.

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.