Bringing you news of successful exits in the sector.
Fund: Parkwalk
Exit: Cambridge CMOS Sensors (CCMOSS)
Details of the fund
Parkwalk exited its holding in Cambridge CMOS Sensors (CCMOSS) when the company was acquired by ams AG in June 2016 in an all-cash transaction.
What does the company do?
The University of Cambridge has a long history of producing disruptive technologies. The commercial development of these technologies supports the university’s mission to disseminate the results of its research and scholarly activities for the benefit of society. CCMOSS micro hotplates and IR radiation sources and detectors were developed by collaboration between the teams at the Universities of Cambridge and Warwick dating back to 1994. Among the senior scientists behind the development were:
- Florin Udrea, Professor of Semiconductor Engineering, Royal Academy of Engineering Fellow & Silver Medal winner;
- Julian Gardner, Professor of Electronic Engineering, Royal Academy of Engineering Fellow;
- Bill Milne, Director of Centre for Advanced Photonics & Electronics, University of Cambridge;
- Foysol Chowdhury, Senior Research Fellow, Microsensors Laboratory, University of Warwick.
The technology is based around its micro-hotplate sensor utilising silicon on insulator (SOI), deep reactive-ion etching (DRIE) and complementary metal–oxide–semiconductor (CMOS) technologies. This forms a platform for a range of gas sensors. It has a low thermal mass allowing for fast switching while using low power, and the emission range allows for the detection of CO, CO2, CH4 and other gases. The products have ultra-small form factor.
CCMOSS’ unique technology, backed by eight patent families with a further ten applications pending, has led the technology from the lab to becoming the world’s smallest commercially available metal-oxide (MOX) gas sensors.
The air-quality sensor ICs are likely to be integrated into billions of smartphones, tablets and all manner of connected Internet of Things (IoT) devices as the IoT finally becomes reality.
What did the company invest the money in?
Parkwalk’s investments focused on the commercialisation of the company’s technology so, while the proceeds of the seed round were deployed to enhance the core technology, the bulk of the later rounds were used to build out the sales and marketing capabilities and commercial infrastructure of the business.
How much was raised?
Parkwalk and the University of Cambridge Enterprise Funds led the seed funding round for CCMOSS in August 2012, so the holding period from our original investment was three years and 10 months. We continued to support the company in several subsequent funding rounds all the way through to exit. The company had earlier received £1 million proof of concept funding from the University of Cambridge and from EC Framework VII and EEDA grants since it was formed in 2008. In subsequent rounds the company was backed by the Parkwalk and angel investors.
How was the exit achieved?
After lengthy consultation with other stakeholders in the company, including the founders, management and shareholders, it was decided to exit the company through a trade sale. From a shortlist of potential buyers, the selection of the most appropriate candidate was made on the basis of the price offered, their plans to continue investing in and growing the business and the acquirer’s intention to utilise Cambridge as a base, hence continuing to support both the local and UK economy.
Parkwalk was instrumental in the negotiations, utilising its capital markets experience to good effect at a period when there was considerable uncertainty about the UK economy and sterling. We will continue to act on behalf of the shareholders and monitor the company as there is a considerable potential earn-out further to the original multiple return.
How much was returned to investors?
The details of the consideration are confidential but the total value of the deal will deliver multiple returns for the founders, the university and Parkwalk’s investors. The transaction generated 11.46x return on investment (including initial EIS tax relief) for investors in the 2012 round. Parkwalk invested over £4 million in the company over its life and saw over 300 underlying EIS investors benefit from this exit.
What other benefits has the company provided?
We believe that CCMOSS offers an excellent example of the benefits of EIS funding, investing in UK university technology spin-outs and Parkwalk’s ethos.
CCMOSS was funded by the university’s funds and by EIS funds. The EIS tax breaks offered to investors were fundamental to providing the funding for the company but their cost to the Treasury was minimal compared to the impact that the company achieved. A total of 33 employees, mostly researchers and scientists, helped develop the company’s product line and the EIS tax advantages were repaid many times over in NI and PAYE alone.
Parkwalk’s preferred flat capital structure (no preference shares) enabled the university and founders to maintain their stakes and benefit from CCMOSS’ success. This will probably lead to a recycling of both the cash and the scientific and management talent back through the local and broader UK economy.
Finally, the availability of EIS funds meant that the company was in a strong enough financial position to organise a competitive bidding process. Hence it could select an acquirer that best suited the needs of founders, university, management, employees and shareholders. This resulted in ams’ commitment to continue investing in the business locally and to create a Cambridge-based centre of technological innovation and development. Again a positive result for the local and UK economy.
