Parkwalk launches new HMRC ‘approved’ EIS fund targeting knowledge intensive businesses

Parkwalk has launched one of the first HMRC Approved Knowledge Intensive EIS Funds to open to retail investors, offering an opportunity to invest in ground-breaking deeptech businesses spun out of UK universities, but with a facility to carry back income tax relief to the previous tax year and reduced admin for investors. 

Launching in early January 2021, the Fund will close at the end of the tax year in April 2021.

Parkwalk has been the largest EIS fund in the market for the last couple of tax years, raising cGBP50 million per year, and this new Parkwalk EIS Knowledge Intensive Fund will co-invest alongside its multi-award winning Parkwalk Opportunities EIS Fund. The Fund will build on the company’s track record of investing in over 100 EIS qualifying companies and 10 years’ experience investing in the distinct asset class of UK university spinouts from the likes of Oxford, Cambridge, Bristol and Imperial University.

The Government recently changed the rules surrounding ‘approved Funds’ to align these funds with the UK’s modern industrial strategy and encourage more investment into Research and Development (R&D) led businesses.

Therefore, HMRC will only approve funds where fund managers willing and able to deploy capital into Knowledge Intensive qualifying EIS companies.

This Government initiative continues a number of recent announcements to support, and take advantage, of the UK’s global position in R&D, including the commitment to increase the R&D investment to GBP22 billion per year, and an enhanced R&D roadmap for the UK.

The benefit for investors in these ‘approved funds’, vs other EIS funds, is the known tax date from which they can claim income tax relief and reduced administration.

In most EIS funds currently in the market, investors can claim income tax relief when the funds are deployed into underlying portfolio companies which is unknown (normally over a 12-18 month period). However, in the new Knowledge Intensive EIS Funds, the relief is dated when the fund closes (with carry back options depending on individual circumstances).

In addition, investors in these new ‘approved funds’ will receive one EIS5 certificate vs 5-15 separate EIS3 certificates, depending on the fund.

Parkwalk has been the UK’s most active investor in companies commercialising world-changing technologies emerging from the UK’s leading universities and research institutions over the last few years. University spinouts are a unique asset class in early-stage and growth investing because they typically have years of R&D underpinning their technologies, with strong Intellectual Property (IP) protection. And it is these types of companies which are ideally suited for the new EIS Knowledge Intensive Fund.

Parkwalk believe this distinct asset class has the ability not only to generate attractive investment returns but also positive returns for broader society. For instance, Parkwalk invest in sectors of strategic importance to UK Plc, such as AI, big data, life science, materials, cleantech, future of mobility, medtech and quantum computing.

And part of Parkwalk’s investment thesis is that ‘deeptech’ offers the world possibly the only solution to some of the greater problems facing us over the coming years…climate change, food and water security, health, longevity and mobility for example. And the events of 2020 has not only accelerated various trends, but resulted in increased interest in Parkwalk’s investments, with a natural alignment to environmental, social and governance (ESG) factors and their impact.

Moray Wright, CEO of Parkwalk, says: “At a time of immense global change, we are pleased to be able to build on our recent success and offer this new Parkwalk EIS Knowledge Intensive Fund to investors. The fund will sit alongside our evergreen Parkwalk Opportunities EIS Fund, and follows the successful close early this year of our latest university specific EIS funds, the Imperial College Innovation Fund I and University of Cambridge Fund VII. The Parkwalk EIS Knowledge Intensive Fund takes advantage not only of the UK’s word leading position in R&D and our position as the most active investor into UK university spinouts, but also the government’s support for this sector to allow a simpler EIS investment.”