Oxford University Innovation, in partnership with Parkwalk Advisors, has successfully concluded a funding round, securing £3 million for its latest fund dedicated to supporting early-stage startups. Established in 2014, the University of Oxford Innovation Fund focuses on fostering tech and science spinouts emerging from the prestigious institution, and this marks the sixth Innovation Fund initiated to date.
The newly raised funds, known as UOIF VI, will be channeled towards areas such as artificial intelligence (AI), digital health, and Industry 4.0, with promising investments already in the pipeline.
Adam Workman, the Head of Investments and New Ventures at Oxford University Innovation, expressed his enthusiasm, noting that amidst a backdrop of reduced fundraising for funds, UOIF VI is a significant achievement as it stands as the largest fund ever raised. During a challenging period for investments in spinouts, this fund is poised to make a substantial impact on Oxford’s early-stage companies.
The University of Oxford’s tech transfer office has a remarkable track record, with its portfolio securing £6 billion in external funding since 2010 and contributing to the establishment of over 300 businesses. Furthermore, the institution manages nearly 5,000 patents. This year, Oxford University Innovation has already facilitated the spinout of seven companies from the university, following 15 spinouts in the previous year.
Alun Williams, Investment Director at Parkwalk Advisors, expressed his delight in witnessing the deployment of these funds in support of companies aiming to commercialize groundbreaking discoveries. Notably, Parkwalk is preparing for the launch of a third EIS fund in collaboration with Imperial College London.
In the year 2023, Parkwalk Advisors emerged as the most active investor in university spinouts, as reported by data firm Beauhurst. University spinouts are a vital channel for converting cutting-edge research and intellectual property into practical applications. The right funding environment, coupled with support from academia, industry, and government, plays a crucial role in enhancing the competitiveness of these innovative companies.
While the past decade has witnessed substantial growth in the number and value of equity deals secured by academic spinout companies, 2022 saw a decrease in equity funding from £2.73 billion in 2021 to £2.34 billion in 2022. The first half of 2023 also reflects this trend, as spinouts secured £743 million in equity investment from 192 deals. However, despite fluctuations, venture capital investments in these ventures continue, highlighting the resilience of innovation.
The allure of the UK’s spinout ecosystem extends beyond domestic investors, with increasing participation from foreign investors, particularly from the US and Japan. These international investments underscore the attractiveness of UK spinout companies on a global scale.
As part of the UK government’s vision to establish the nation as a leading global innovation hub by 2035, strategic initiatives have been set in motion, including plans to increase annual public investment in research and development to £22.0 billion. These initiatives, coupled with ongoing investor enthusiasm, position UK spinouts to play a pivotal role in the country’s quest to emerge as a global innovation leader.
The significant rise in equity investments secured by UK spinouts over the past decade, along with the increasing number of companies spinning out from academic institutions, reflects the growing interest in the UK’s spinout ecosystem. Between 2013 and 2022, the annual number of deals nearly doubled, from 212 to 414, while the combined value of these deals increased sixfold, from £387 million in 2013 to £2.34 billion in 2022.
Although the number of deals remained stable between 2020 and 2022, the value of deals nearly doubled from 2020 to 2021. This surge can be attributed to a substantial increase in the number of “megadeals” exceeding £50 million, which rose from five in 2020 to 14 in 2021. However, in the first half of 2023, equity investments in spinouts have amounted to £743 million from 192 deals, indicating a return to pre-pandemic funding levels amidst broader economic challenges.
Oxford University Innovation’s latest fund demonstrates the resilience and potential of UK spinouts as they continue to attract investments and contribute to the nation’s innovation landscape.
