Unicorns, universities and unbridled opportunity: why Cambridge is the best home for tech start-ups

The UK tech sector achieved its best year ever in 2021, with more investments, more unicorns and more jobs than ever. In fact, the UKā€™s tech ecosystem is now valued at $1 trillion, a milestone only achieved by China and the USA to date. Jon Horden, CEO of iKVA, explains why.

United Kingdom

The UK is particularly good at nurturing start-ups and scale-ups into successful global companies; it was ranked the second best European country for start-ups in 2019 out of 50 European countries, with notable performances in the Cost of Doing Business and Business Climate categories. Low corporate tax rates, generous tax benefits, such as theĀ Enterprise Investment SchemeĀ (EIS) andĀ Seed Enterprise Investment SchemeĀ (SEIS), and a wide range of start-up support all combine to make the UK an attractive option for entrepreneurs. Thanks to these favourable conditions, the UK accounted for more than 39% of all unicorns in Europe – from Cambridgeā€™s very own ARM, to Revolut, to Deliveroo. Cambridge-based companies receivedĀ $5.3 billionĀ worth of investment in 2020, second only to London for UK investment.

Regional hubs

Against this backdrop of success, with more than 30% of UK tech investment being made in start-up and scale-up companies outside London, a number of regional tech hubs have emerged. In the UKā€™s Levelling Up Power Tech League 2021 Manchester, Edinburgh, Cardiff and Belfast were all ranked in the top 10 cities for investment but Cambridge was crowned the top regional hub. Venture capital investment in Cambridge has almost doubled every two years since 2017 and companies received Ā£1.5 billion in funding in 2021. Cambridge Accelerate, and Cambridge Enterprise are just two avenues of support available to start-ups in Cambridge.

The Cambridge secret to success

With six unicorns currently in existence, it is clear access to a wealth of venture capital investors and increasing numbers of high-growth tech companies, it is no surprise that Cambridge is the leading regional tech city in the UK.

At the heart of the Cambridge technological powerhouse is the University of Cambridge. One of the oldest universities in the world, it is currently ranked number five in the World University Rankings and is one of the worldā€™s leading institutions for artificial intelligence (AI) research. AI and cloud computing make up more than a third of total tech venture capital investment value. The East of England is a proven leader both in primary research and the application of AI to real-word problems; it is the birthplace of much of the AI we know today ā€“ Alexa has its origins in the Cambridge startup Evi while Darktrace and Autonomy originated in Cambridgeshire. Start-ups thrive whether they are decision making platforms leveraging cognitive reasoning, Chatbots, autonomous vehicles or even AI powered running apps. Our AI ecosystem is unrivalled in the UK and Cambridge Networkā€™s 2021 inaugural AI Festival helped to cement the regionā€™s reputation as a world leader in all things AI.

With a long-standing reputation for world-class research in engineering, science and technology, the University holds undeniable appeal for start-ups looking to harness the latest innovation for commercial success. More than 300 highā€tech ventures involving the University of Cambridge have been created in the last 20 years, including more than 240 firms founded by alumni of the Cambridge University Computer Lab. Notable examples include Raspberry Pi and Jagex.

iKVA was founded out of the University of Cambridgeā€™s Computer Laboratory and The Alan Turing Institute and is an excellent example of the power of partnerships between the academic and business sectors. Itā€™s AI-powered knowledge management software solutions have now been adopted by global giants, including Mott MacDonald and Fidelity.

Academia and Industry

During the 1960s, the government urged universities to form links with high-tech businesses, which inspired the creation of the UKā€™s first science park by Trinity College. The Collegeā€™s investment facilitated the Cambridge phenomenon, leading to the organic growth of the Silicon Fen, a term coined in 1980 by the Financial Times, when the newspaper predicted that the technology being produced in and around Cambridge would be ā€˜vital to Britainā€™s basic prosperity.ā€™ Cambridge is now home to more than 10 tech and science parks, providing the infrastructure for continual research, development and innovation that continues to contribute to the value of the UKā€™s tech sector.

In the 1980ā€™s, the first venture capital companies arrived on the Cambridge science park, providing further catalyst for growth in the area. Cambridge is now home to the largest number of venture capital investors outside London, making it a particularly appealing city for start-ups and scale-ups looking to secure funding. Spin-outs from the University of Cambridge are achieving record breaking exit values, thanks to its world-class research ā€“ particularly in deeptech. In addition to a high number of venture capitalists and angel investors, the University itself actively provides funding to commercialise scientific and technological discoveries from within itself. Cambridge Enterprise provides alumni and supporters of the University with the opportunity to invest in University spin-outs through the Enterprise Investment Scheme and iKVA received investment from Cambridge Enterprise during its last funding round.

Talent

As well as the infrastructure and research available to start-ups, and scale-ups, another key benefit of being based in Cambridge is the rich talent pool. Cambridge is home to two universities: Anglia Ruskin University and The University of Cambridge. Anglia Ruskin consistently ranks in the top 40 UK universities while The University of Cambridge is one of the most prestigious higher education institutions in the world, and retains 39% of its graduates. High standards of living, post-graduate career opportunities and robust transport links between Cambridge and London all encourage graduates to remain in the city, widening the pool of talent available to technology companies. The reputation of the University also attracts a large number of international students to study in the city, who remain post-graduation, enabling the sector to access global talent on its doorstep.

With the news that the government has increased its investment in R&D to Ā£20bn by 2024-25, it is clear that Cambridge will continue to play a fundamental role in driving the growth and development of the UK tech industry, cultivating more early stage companies such as iKVA and contributing to the continued success of the UK on the global tech stage.

iKVA develops AI-enabled knowledge management software for organisations. More at ikva.ai.

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