In the next instalment in our series of exclusive interviews with industry experts, Moray Wright, the CEO of Parkwalk Advisors, provides his insight on the biggest growth opportunities and most common risks for investors, and discusses his company’s approach to investing.
1.) What tax-efficient schemes does your company work with, and how do you offer a unique/compelling approach for advisers?
Parkwalk is the largest growth EIS fund manager, backing world-changing technologies emerging from the UK’s leading universities and research institutions. With £500m of assets under management, we have invested in over 160 companies across the Parkwalk Opportunities and Knowledge Intensive EIS Funds, as well as the award-winning enterprise and innovation funds that we manage for the Universities of Cambridge, Oxford, Bristol and Imperial College.
Parkwalk invests in businesses creating solutions to real-world challenges, with IP-protected innovations, across a range of sectors including life sciences, AI, quantum computing, advanced materials, genomics, cleantech, future of mobility, medtech and big data.
2.) How active are you in providing education to advisers on the types of clients that are suitable for these types of investments, as well as any changes in regulation or nuances in the existing rules?
As one of the leading EIS managers in the industry, launched in 2009, and the first major EIS manager to launch a Knowledge Intensive EIS Fund in December 2020, we are experienced EIS investors and our investment strategy has never changed, despite various industry rule changes over the years. We have always invested in growth focused, knowledge-intensive early-stage university spin-outs, backing companies with strong intellectual property who are on the cusp of commercialisation. For advisers, we offer 1-1 meetings, webinars, fee illustrations and helpful EIS case studies. Not all EIS products are structured the same, and not all investors are suited to EIS investments in terms of risk/return profiles.
3.) Where and in which types of companies are you seeing the biggest growth opportunities?
We are seeing a lot of high-quality deal flow in the university spin-out sector, with lower valuations providing some interesting opportunities from our university network and co-investor relationships. Our investment strategy is sector agnostic, but we are seeing growth in Quantum Computing, which will continue to flourish as a sector in 2024, a year which may mark the first real demonstration of quantum advantage – which will be a truly catalysing milestone for the industry.
We believe that Life Sciences will continue to thrive, as computing and biology continue to come together to deliver ever greater insight and outcomes, including the use of AI in expediting clinical trials and supporting drug discovery processes. Digital Health will see further adoption of clinical technologies that can improve productivity and reduce patient waiting times, and we are also seeing growth opportunities in MedTech.
4.) What do you see as the biggest risks for investors?
EIS by nature is a high-risk investment, and investors should be fully aware of the risks before they invest with us or any EIS provider. EIS is also fairly illiquid by nature, and has a medium-long term holding period, which at Parkwalk is a target of 4-8 years. The risks are somewhat mitigated, however, by the five associated tax reliefs available under the Enterprise Investment Scheme, including loss relief where applicable.
5.) Should advisers be worried about a lack of diversification, and why?
We believe that clients should aim to have a diversified portfolio. At Parkwalk we offer diversification of 8 companies in our Opportunities EIS Fund and 10+ companies in our Knowledge Intensive EIS Funds.
