New CCL war chest revives its spin-out ventures
Cambridge Consultants, one of Europe’s leading technology-based design and development companies, plans to reactivate its spin-out business with the creation of a new venture fund.Cambridge Consultants, one of Europe’s leading technology-based design and development companies, plans to reactivate its spin-out business with the creation of a new venture fund.
The company has a terrific track record of creating and developing start-up companies, with just four of its spin-out businesses having a combined market cap of almost £2 billion.
The new war chest will be created jointly by Cambridge Consultants and an investment partner with the aim of having it established and operating by this summer.
Several blue-chip investors have already shown considerable interest in the fund and detailed negotiations are underway.
The aim of the fund is to invest exclusively in Cambridge Consultants’ own new ventures, following the company’s success in this arena. It will allow Cambridge Consultants to re-energise its activity in this area in a controlled fashion, aiming to produce one spin-out every two years on average. The first new venture is expected to appear in 2007.
Candidates for the next batch of ventures are expected to come from a range of Cambridge Consultants’ core markets, including wireless technologies, drug delivery, diagnostics, radar and electronics.
The company has created over 20 new ventures in the past 25 years, several of which have gone on to floats on London Stock Exchange, namely Domino, Xaar, Prelude Trust, CSR and Vivid (sold to Vectura).
Other successful spin-offs include Alphamosaic and Inca, who have subsequently been acquired by Broadcom for $123m and Dainippon Screen for Euro 43.8m, respectively. Both sales were achieved within five years of the companies being formed.
Spin-outs from Cambridge Consultants collectively employ almost 3,000 people, many of whom are headquartered in the Cambridge area. It is this pool of successful technologists in one area that has created what is often referred to as the ‘Cambridge Phenomenon’ or ‘Silicon Fen.’
Ray Edgson, ventures director at Cambridge Consultants, said: “We learnt a great deal about creating new ventures in the late ’90’s and early part of this decade, including the effects that creating spin-outs have on a business of our size.
“Venturing can be a very disruptive process; however, we believe that by taking a controlled approach to this segment of our business model we can bring significant benefit to our clients, our staff and our business. At the same time we are able to generate significant return on investment.
“Clients value the fact that our business model is more than just fee-for-service, as it proves beyond doubt that we have the skills to successfully turn innovation into tangible value both for them and for ourselves.
“Creating spin-out companies is also a significant factor in helping us to attract top-flight engineers who want the benefits of a structured career path, coupled with the opportunity to be truly entrepreneurial.”