Cambridge: The UK’s First Tech City

For more than two years now, a government-led marketing blitz has seen the media spotlight trained on Tech City, a cluster of a 900+ Internet companies located around Old Street roundabout in East London. Parties have been held on the West Coast of the U.S. (one was attended by Prince William and Kate Middleton), croissants and coffee have been served at Downing Street, and there was even a reception in the lavish surroundings of the Foreign and Commonwealth Office — all in a bid to coax VCs, angel investors and big Internet players such as Google and Facebook to the area. The prime minister even suggested in a speech that London’s “Silicon Roundabout” could one day rival Silicon Valley.

It can be argued that if the Government had done its homework more thoroughly, it might have shied away from that particular comparison. After all, the UK already has a rival to Silicon Valley — it’s little more than an hour away from London by train and has one of the world’s greatest universities. The high-tech cluster in Cambridge is not only far more mature than London’s (its evolution spans half a century), but it also boasts 1,400 firms, employing 53,000 people, with annual revenues totaling £13 billon.

“If we’d had the £2 million a year [that Tech City has had] to market ourselves, we’d be on steroids by now,” says David Cleevely, founder of CRFS spectrum intelligence systems, former chairman of telecoms consultancy Analysys and one of Cambridge’s highest-profile tech veterans. “Thirty years ago the Segal Quince Wicksteed report said the ‘Cambridge Phenomenon’ would really have come of age when the city had its first billion-dollar company. Well, today we’ve got two $10 billion and 11 $1 billion companies — that’s not bad for a city of 125,000 people.”

The two “$10 billion” companies are Autonomy, a software giant, and ARM Holdings, which builds RISC semiconductors and microprocessors and has a market cap of between £9 billion and £10 billion. Autonomy was purchased by Hewlett-Packard Co for £7 billion last year — an acquisition that has since become mired in acrimony, with HP alleging that Autonomy made financial misrepresentations ahead of the deal, essentially inflating the UK company’s value. Autonomy, which was founded by British entrepreneur Mike Lynch, a scheduled speaker at the London Web Summit, is reportedly now being investigated by accountancy regulator The Financial Reporting Council.

Both ARM and Autonomy came from a technology scene that can be traced back to the founding of Cambridge Consultants in 1960, by a pair of Cambridge University graduates who pledged to “put the brains of Cambridge University at [the] disposal of the problems of British industry.”

As the cluster grew, a number of key entrepreneurial figures emerged, including Cleevely and Hermann Hauser, who co-founded Acorn Computers and, later, ARM as well as Amadeus Capital Partners, a venture capital firm that has seeded some of the city’s most important companies. Today, while Tech City is built on e-commerce and web-based services, the Cambridge cluster encompasses everything from hardware to biotech, wireless to life sciences and big data to Raspberry Pi.

“It’s all happened [because of] networking magic,” says Cleevely, noting that Cambridge’s ecosystem has about 50 professional networks. For Jon Bradford, co-founder of Cambridge-based software start-up accelerator Springboard, which launched in 2009, “the normality of being an entrepreneur” is a key driver in the city’s success story. “It’s one of the few places in Britain where you can see people talking about their latest start-up ideas in the corners of coffee shops — and that’s viewed as normal,” says Bradford. “The wonderful thing about good ecosystems is that entrepreneurship is just really boring and commonplace.”

The city is also very open to outsiders, adds Bradford, who launched a new accelerator targeting the Internet of Things in Cambridge (and London) in January — and is now poised to make offers to the final eight hardware start-ups selected. “If you look at the people who’ve made money in or around Cambridge as entrepreneurs, very few are actually from here,” he says. For example, Hauser is Austrian and serial entrepreneur and angel investor Sherry Coutu, co-founder of the Silicon Valley Comes to the UK conference, is Canadian. “There’s an ability here to attract and retain smart, entrepreneurial people,” says Bradford.

Of course the university is the major reason that many of them come to Cambridge in the first place. Just as Stanford University has hot-housed and fed Silicon Valley IP and talent, the synergy between campus and cluster is considered to be another major factor in Cambridge’s dominance of UK high tech. “The university is quite fluid at the edges, which allows it to sit very closely with industry in Cambridge,” says Anne Dobrée, Head of Seed Funds at Cambridge Enterprise, the university’s commercialization office. Its portfolio contains 68 companies, which have brought a total of £1 billion in follow-on funding into the region. “I think one of the critical parts of that has been the university’s historic flexibility with its students and staff for them to do their own thing on top of their work.”

Cambridge entrepreneurs, many of whom have emerged from university labs, have been notably quick to spin off start-ups in ‘next wave’ emerging fields such as cleantech and, in particular, medtech. While traditionally, innovation in life sciences and the development of new drugs have been driven by the pharmaceutical industry, that is now changing, according to Andy Richards, a serial biotech entrepreneur and angel investor. “What’s happening at the moment is that we are really going through a stage where technology — things like computers and data — is being applied into the healthcare space. It’s taken a long while for a whole set of reasons, but now things are going very quickly and there’s an enormous new drive of innovation which is coming from marrying medicine and life sciences [on one side] and technology, computers, data, sensors and mobile [on the other],” he says.

“The drive is coming from a number of directions,” explains Richards. “One is our ability to handle large amounts of data. Second is that the tech world is looking at healthcare as one of the big new areas to exploit. That’s why the likes of Qualcomm are very active in trying to build up telemedicine-type companies. Finally there’s a realization about the personalization of medicine. Things are becoming much more patient-centric and the result of that means that the low-hanging fruit, here, is not about the discovery of new drugs, although that will come as a new wave following all this, it’s about detection, diagnosis, data — and then outcomes. The people who are able to play in that space are going to be very interesting companies indeed.”

As an example, Richards points to Cambridge Cognition, a firm that develops and commercializes computerized neuropsychological tests. The company developed a smart system for assessing cognitive function, which was “language independent.” However, because it required a touch-screen at a time when they were expensive, traction was initially slow, he says. “Over the last few years touch screens have become ubiquitous and that has allowed this platform to burst out from a very specialist clinical setting into a broader environment,” says Richards. That is important because early diagnosis of dementia, particularly teasing out the different forms and identifying Alzheimer’s disease earlier, is absolutely critical. A lot of the techniques which are currently used to detect the disease early — taking samples of spinal fluid and a number of other very expensive techniques — are not amenable to screening large chunks of the population and identifying people, who have memory worries, at an early stage.

“Cambridge Cognition technology, which has evolved from a high-end clinical system to something that now sits on an iPad and can be used in GP surgeries and in the wider population to start to tease out the wider detection of Alzheimer’s, is really important,” says Richards. “It’s world leading. I also know they are working hard with people who have complementary technologies, particularly in the imaging space. The real win, here, is combining technologies — smart cognitive testing and quantitative MRI imaging. That should be an approach that starts to solve this problem. And that’s a very big thing.”

As the biggest players, ARM and Autonomy have had a big impact on the city’s tech cluster. So it is logical to ask whether the ongoing fallout between Autonomy and HP will damage Cambridge’s reputation? Hauser insists not: “Although the accusations flying between Autonomy and HP are serious, I’m skeptical that it will have a significant long-term impact on the UK or on the Cambridge high-tech cluster,” he says. Commercial disputes happen all the time — they are part of business, and they rarely last more than a few years. The contrast between the litigious style of the U.S. and the UK business culture makes it easy to see both why this dispute is exceptional and why it doesn’t deserve alarm. Cambridge has been a center of leadership for over 800 years and a high technology cluster for more than 50 years. I doubt whether one bump, even a large one, will have much impact on its long-term success.”

The city’s most promising path to growth may lie elsewhere anyway. It’s in the fusion of technologies — in the unexplored crossover between, say, engineering and life sciences, big data and medicine — where Cambridge’s future almost certainly lies. As the cluster has matured, the city’s tech companies have shown a rare talent for reinvention. For that reason as much as any other, Cambridge is likely to produce more billion-dollar-plus companies, despite government focus elsewhere.



Cambridge Tech: Four to watch

Who: Featurespace

What: An enterprise tool which uses ‘behavioural change identification’ algorithms to increase customer retention and reduce fraud.

Inside story: Featurespace is now used by the gambling giant Betfair to spot fraud.

Founders: William Fitzgerald, Professor of Applied Statistics and Signal Processing at Cambridge University, and his PhD student, Dave Excell.

Investors: include NESTA, Imperial Innovations and Cambridge Angels.

Founded: 2005


Who: Neul

What: Wireless Data Communications and “world leaders in white space.”

Inside story: Neul’s core team built fabless semiconductor giant CSR Plc (formerly Cambridge Silicon Radio).

Founders: James Collier, Glen Collinson, Prof. William Webb, Robert Young and Neil MacMullen.

Investors: DFJ Espirit, IQ Capital and Cambridge Angels.

Founded: 2010.


Who: Health Analytics

What: The NHS meets Big Data, Health Informatics links and analyzes NHS data from multiple sources to enable 360-degree visibility and decision-making.

Inside story: Launched to create a software application to support GP commissioning.

Founders: Phil Wigglesworth and Stuart Bond.

Investors: 2011 Winner of the Cabinet’s Innovation Launch Pad.

Founded: 2009


Who: Cambridge Temperature Concepts

What: A ‘consumer telemedicine’ company, its DuoFertility underarm sensor provides continuous fertility monitoring.

Inside story: It’s estimated 500 babies have been born due to DuoFertility.

Founders: Cambridge University scientists including Dr. Shamus Husheer and Dr. Oriane Chausiaux.

Investors: Cambridge Angels, Downing Enterprise, Cambridge Capital Group and Qualcomm Life fund.

Founded: 2006.





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