Cambridge Cluster can't go it alone claims Library House
The growth of the Cambridge technology cluster has stalled and its global competitiveness would best be revived by joining forces with Oxford, London and the Thames Valley in a new ‘supercluster’, says a report from Library House.
Its no nonsense message to those influencing the business fortunes of Cambridge is that an island mentality is doomed to failure because of apparently insurmountable geographic and infrastructure constraints.
A golden powerhouse integrating the combined innovation and cash-pulling power of Cambridge, Oxford, London and the Thames Valley, however, would enable this extended economic nexus to compete with the world’s leading hi-tech clusters – like Silicon Valley – on equal terms.
This combined area already receives more than half of the total venture investment in the UK and could arguably claim an even higher share by promoting a powerful joint brand and brainpower, Library House argues in its 2006 Cambridge Cluster Report - ‘The Supercluster Question.’
The conclusions of CEO Doug Richard and his team are bang on the money and mirror the calls Business Weekly has been making for several years for more joined up thinking.
At present Cambridge, Oxford, London and the Thames Valley plough their own furrow with great success but have to compete against each other and then take on the world heavyweights.
Imagine the calling card such a supercluster, pooling resources, would be able to hand foreign investors and collaborators – and the potential payback for UK plc.
The timing of this thought-provoking report could hardly be better as Business Weekly receives intelligence of fresh waves of investment – principally from American and Asian sources – heading for these shores.
The Library House report spins on three main themes:-
• The “solid” return Cambridge cluster companies have brought investors
• The shrinking innovation pool in the stalled Cambridge cluster
• How a new supercluster could counter the infrastructure problems
The report says: “Over the last two years, companies in the Cambridge cluster have delivered solid returns to their investors. At the same time it is concerning that the growth of the cluster has stalled; the total number of innovation-based companies and the total amount of investment in them remain essentially unchanged.
“We postulate that in order to grow beyond its current size, the Cambridge cluster will need to develop and strengthen its links with other iinnovation clusters nearby and become part of an innovation supercluster.”
Over the 18-months to July 2006, the Cambridge cluster saw 12 of its companies list on public markets and a further 24 sold or merged with other businesses, generating over £1bn of value for shareholders and management teams.
In total, the venture-backed companies that exited, including those that went out of business, generated a combined ROI of 2.27x and an IRR of 28 per cent to their investors.
Library House currently tracks 973 innovation-based companies in the cluster compared to 988 companies 18 months ago – a net decrease of 1.5 per cent.
During 2005, £125m was invested in cluster companies compared to £154m and £133m in 2004 and 2003, respectively.