By Amy Thomson and Matthew Campbell
Nov. 25 (Bloomberg) – British venture-capital investors in
recent years have traded the leafy courtyards of Cambridge for
the hipster coffee bars and converted warehouses of Shoreditch,
a once-gritty East London neighborhood brimming with startups.
Now, they’re dusting off their tweed blazers and train passes.
Cambridge, home of the university that has hosted scientists
from Charles Darwin to Stephen Hawking, and a clutch of tech
startups in sectors like semiconductors and big data, is back in
vogue, venture investors say. The reason: an increased interest
in heavy-duty technology that’s more difficult to replicate than
the social-media and e-commerce ideas coming out of London.
“We are attending more events there, getting up there more
often -- significantly more than a couple of years ago,” said
Harry Briggs, an investor at London venture firm Balderton
Capital. “These things go in cycles; the froth of consumer
companies begins to ebb, and people look for more solid business
The university town, with a population of 124,000, has some
high-profile fans. Mike Lynch, who founded Autonomy Corp Plc in
Cambridge, has established a $1 billion venture fund there.
Lynch’s 2011 sale of Autonomy to Hewlett-Packard Co. for $11.1
billion, Cambridge’s largest-ever deal, is being investigated by
Britain’s Serious Fraud Office for alleged accounting
irregularities. Lynch denies any wrongdoing and remains a key
member of the British tech community as well as a prominent
advocate for Cambridge startups.
Cambridge Innovation Capital, a fund affiliated with the
university, has 50 million pounds ($81 million) to spend in the
next three years. And accounting firm KPMG is creating a $100
million fund for investments in data and analytics that will
have Cambridge as one of its focus areas.
Cambridge “is a very powerful brand in its own right, and
it becomes a magnet to attract all of these companies,” said
Alwin Magimay, U.K. lead for KPMG Capital.
Seeking quicker access to its brainpower, investors in the
capital are lobbying the government for a new express train line
to Cambridge from London’s Liverpool Street station, the closest
terminal to “Silicon Roundabout,” the hub of the Shoreditch
That would mean easier visits to the likes of Raspberry Pi,
a maker of small, cheap computers for kids that sprang out of
the University of Cambridge’s computer labs, and Darktrace, a
behavioral cyber-security company run by former U.K. cyber
defense experts and Cambridge researchers. Lynch’s new fund in
September made Darktrace its first investment.
The amount of venture capital invested in London declined
in 2012 to 126 million pounds from 131 million pounds a year
earlier, while that in the region that includes Cambridge rose
for the first time since at least 2009, to 23 million pounds
from 19 million pounds, according to the British Venture Capital
The renewed interest in Cambridge is a return to the
origins of the British tech sector. The country’s earliest
digital-age success stories were largely based in and around the
town. These include Autonomy, engineering software maker Aveva
Group Plc, and chipmakers CSR Plc and ARM Holdings Plc, the most
valuable U.K. tech company, with a market capitalization of 13.9
“Cambridge has always had companies that had deep
invention behind them and really deep intellectual property,”
said Harry Nelis, a partner at venture firm Accel Partners,
which has backed London startups such as children’s game maker
Mind Candy and Wonga, an online loan provider. In Shoreditch,
“people are much more in tune with consumers but they’re not
always based on deep intellectual property or defensible
Complex enterprise applications such as the analysis of
huge volumes of data and the provision of processing power over
the Internet are in fashion. The global market for analytics
software is expected to grow at an annual rate of 10 percent
through 2017, according to Bloomberg Industries.
Recent government efforts to promote the technology sector
have largely focused on London. Prime Minister David Cameron has
backed “Tech City,” a four-mile swath of formerly run-down
neighborhoods stretching from the edge of the financial district
to the site of the 2012 Olympic Games.
The government last year pledged 50 million pounds for a
new London startup incubator, and has hired ex-Facebook Inc.
executive Joanna Shields to promote Tech City. Google Inc.,
Amazon.com Inc., and Cisco Systems Inc. have all taken space in
the area or are planning to do so.
Still, while London has grabbed attention with consumer-
focused companies like Mind Candy and Wonga, Shoreditch has yet
to produce a large, successful initial public offering.
Ideally, Cambridge, London and the smaller tech hub around
the University of Oxford will become complementary, rather than
competitors, said Saul Klein, a partner in London at Index
Ventures, which has backed companies such as game developer
King.Com and Just-Eat, an online food delivery service. He
envisions a relationship similar to that of San Francisco and
Silicon Valley in California, where a 35-mile journey links the
academic hub of Stanford University with the capital-markets
expertise and talent pool of a big financial center.
Klein points to AlertMe, a startup whose software manages
heating and electrical systems, as an example of that approach.
With roots in Cambridge, it has offices there and headquarters
in Tech City, drawn by London’s skilled staff and Cameron’s
support for the area.
“I think of it as a golden triangle -- if you look at the
distance covered between Cambridge, Oxford and London, it’s the
same size as the physical distance in Silicon Valley,” said
Sherry Coutu, an angel investor who sits on the University of
Cambridge finance board and runs a program that connects Silicon
Valley entrepreneurs with counterparts in the U.K. “I like to
think of it as a powerhouse connecting innovation in Oxford,
Cambridge and London, and we all benefit from knowing one
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--Editors: David Rocks, Kenneth Wong
To contact the reporters on this story:
Amy Thomson in London at +44-20-7392-0662 or
Matthew Campbell in London at +44-20-3525-8684 or
To contact the editors responsible for this story:
Kenneth Wong at +49-30-70010-6215 or
Aaron Kirchfeld at +44-20-3525-8830 or
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