Venture View: Neil Cameron of Parkwalk talks about the innovation happening in UK universities and what he looks for in a start-up

With over £500m of assets under its management, Parkwalk is the UK’s most active investor in the university spinout sector – a spinout company being defined as one set up to “exploit intellectual property developed by a recognised UK university or research institution.”

And since it was founded in 2009, Parkwalk has backed over 180 companies across its managed funds, working in conjunction with UK universities including Oxford, Cambridge, Imperial College London, and Bristol.

Parkwalk’s investment director, Neil Cameron, tells BI Foresight that UK universities consistently feature at the top of global university rankings, making the country fertile ground for innovation investment.

“Since Parkwalk began, we have only ever invested in UK university spinouts,” says Cameron. “Over the past 15 years we have grown a considerable network throughout the university ecosystem, which allows us early access to technologies developed by the brightest minds in the world.”

Some universities have even taken the decision to set up their own investment funds, enabling them to benefit from the intellectual property they had a hand in developing, such as Oxford University’s 50% ownership of its preferred investment partner Oxford Science Enterprises (OSE). 

“These technologies will frequently have been incubated within the universities over many years, benefiting from both financial support in the form of research grants, as well as from the broader expertise and influence of the universities and their technology transfer offices (TTOs),” explains Cameron.

Key considerations when investing

In a recent interview, investor and entrepreneur Hermann Hauser told BI Foresight that having the right team in place was the most important consideration in any investment, and Cameron agrees.

“It may sound trite but the management team is probably the most important success factor in any fledgling business,” says Cameron. “Without good management no business, however attractive, is likely to be a success. Other things we look for in a pitch are a protective ‘moat’ which can be IP or know-how, a realistic business model that shows an understanding of the company’s target market, and some consideration of potential exit strategies.”

In addition to this, Parkwalk also considers factors such as co-investors, corporate governance, cap table composition, and share structures, to try and ensure alignment around the company’s key objectives.

Investing early in quantum

According to a 2024 Parkwalk report, the spinout that secured the most single-round funding in 2023 was Oxford Quantum Circuits, which raised £78.7m from various investors, and represents a general shift in focus from AI to quantum. 

Thanks to a rich ecosystem of quantum research in British universities – such as Bristol’s QET Labs – the UK already has a number of quantum success stories, with Parkwalk investing in the sector since 2017.

“At that point the only significant players were really IBM and Google, with a few other fledgling start-ups” says Cameron. “The level of technical knowledge in the market was fairly weak, with many differing opinions as to the best technology platforms. To some extent this is still the case. We therefore invested primarily on the strength of the management teams. And being a fund that only invests in UK university spinouts, we also had the benefit of access to the leading academics in the field and could back them.”

Longer-term investments

Set up to provide funding from seed capital all the way through to later-stage investment, Parkwalk is able to take a longer-term approach to its portfolio. This has been vital when considering the long development timelines of most quantum-focused companies.

“One advantage we have is that we are an evergreen fund, so our fundraises are not time-limited,” says Cameron. “However, we also operate under the Enterprise Investment Scheme, so our underlying investors would ideally like a return on their money within a five-to-seven-year time period.”

Parkwalk’s main Opportunities EIS Fund currently invests in three quantum spinouts. Firstly, Oxford Quantum Circuits is developing a superconducting quantum computer, utilising the same technology as IBM and Google. Elsewhere, Quantum Motion Technologies is creating a quantum computer using silicon, which – if proven possible – would allow the company to take advantage of existing global semiconductor fabrication. And the last is Phasecraft, a quantum algorithm company. 

“Using state-of-the-art mathematical techniques, Phasecraft is drastically reducing the hardware requirements needed to solve certain problems which are impossible for a classical computer,” says Cameron. “This potentially brings forward the date when practical quantum supremacy will be achieved.”

So which quantum technology will win?

With the company having invested heavily in quantum computing since 2017, and having worked with some of the UK’s leading quantum start-ups, we asked Cameron which platform Parkwalk believes will win the race for quantum computing dominance. 

“This is the $64,000 question that everyone wants to know the answer to,” Cameron tells us. “Typically we see each different technology making advances and then hitting some technical barrier that they have to solve. Investors therefore have to be able to cope with these setbacks and continue to fund the businesses. The investment returns have the potential to be huge, but are as yet difficult to define.”

Parkwalk is generally optimistic about the future of UK spinouts, believing that the UK ‘Mansion House reforms’ – established in 2023 – could unlock up to £50 billion of start-up funding. The Reforms follow pressure on the UK’s pension market – Europe’s largest at £2.5 trillion – to start investing in unlisted UK equities, which includes university spinouts. And Parkwalk’s Equity Investment into Spinouts 2024 report claims that start-ups coming out of UK universities raised £1bn in the first half of 2024. 

Sadly, though, many British start-ups have had to relocate to the US upon reaching series C funding, as historically there hasn’t been enough domestic support. As a result, Cameron believes that it’s vital for the UK to ensure a steady flow of capital if it wants to buck this trend.

“The biggest risk for us is that companies run out of money,” Cameron warns. “The UK government has been a leader in supporting quantum technology over the last 10 years, however now that the start-ups require scale-up capital, it’s proving exceedingly difficult to find domestically.”