Cambridge Innovation Capital raising ambitions for the Cambridge Cluster
Cambridge ideas may have changed the world but all too often those innovations are sold by the founders before they realise their potential as multi-million pound companies.
This is now set to change as Cambridge Innovation Capital (CIC) looks to build on the first three in a series of investments to Cambridge companies that are committed to enriching the cluster. Victor Christou, senior investment director at CIC said: “Over the years, in Cambridge we have learned how to create a nurturing environment for young companies.
“This is evidenced by the activity of the angel funding groups operating in the Cluster. We aim to build on this activity and reset the ambitions of founders by helping them to aim higher.
“We provide finance but that is only part of what we can offer; our advisory panel has a breadth and depth of knowledge and network that can offer support as these companies grow.”
But Christou doesn’t intend to helicopter in managers to accelerate growth as he explains: “A company needs a strong team and the old saying ‘back the jockey not the horse’ still rings true. This is an area where CIC brings value by recognising existing strengths and then complementing them where necessary, catalysing the creation of a team that can drive the business forward.
“Not through interim managers, more by providing access to finance and a network of contacts. More capital allows a business to attract high quality people and flesh out the operational team.”
CIC has received substantial support from the University of Cambridge, which includes equity from Cambridge Enterprise and cash from the Endowment Fund and as a consequence CIC enjoys a particularly strong relationship with the University. But, CIC is independent and of the first investments, only one originates from the university.
Robert Tansley, CIC’s investment director responsible for its Life Science investments, says the initiative extends into the greater Cambridge hinterland. He said: “Businesses need to have a Cambridge link. But we are inclusive and believe the cluster extends to the surrounding science parks across the region; it goes north to Peterborough and west to Stevenage, for example and includes all of the Science Parks that have a biotech focus.
“Life Science investing is an important area for us given the strengths of the Cluster and we expect our fund to be balanced across Life Science and Technology in the long run.
“Across both sectors we are looking for companies that are IP rich, with a great team and an exciting product. Our initial focus is not to attract businesses to Cambridge, but more to grow and retain existing talent that is already here.”
The first three investments fit that model. Origami Energy based in the St John’s Innovation Centre is still in ‘stealth mode’.
“It has a great team and is addressing the energy sector which is going through a rapid change in the way that energy is generated, distributed and sold. There is a massive opportunity here for disruptive technology,” says Tansley.
Cambridge Imaging Systems, based in Willingham, has developed a ‘YouTube in a box’ for organisations that want to securely manage online access to their video. It has a strong team and a long track record of innovation working with the BBC, MOD, and the British Library among others. Tansley said: “The driven CEO has come into a business co-founded by his father. He has seen an opportunity to create huge value by morphing its gold-standard video archive products into cloud-based services. CIC funding is the first step in transforming this company into a multi-million pound operation.”
The third investment – Jukedeck – is a spinout from the University of Cambridge music department that automatically generates copyright-free music, with potential to be used by video creators or game developers. Founder Ed Rex is a charismatic and energetic entrepreneur and he has seen an opportunity to make it easy for developers to create reactive music that responds to action in videos or games.
Jukedeck is currently located in London, but Victor Christou shrugs and points out that Cambridge is home to – among many others – Frontier Developments and Jagex, two of the biggest computer games companies in the UK and there has always been a strong tradition of computer visualisation and animation in the region. He sees the potential of CIC to reverse the migration of talent and to create a magnet for those at the convergence of music and IT.
Christou concludes: “We aim to be a force for good. We expect our companies to have global ambitions and, as we have seen with ARM and Domino, we know this can be achieved by retaining a Cambridge operation and building a big business here.”
The Cambridge Cluster in numbers
• Since 1960 around 5,000 hi-tech companies have been founded
• Today there are over 1500 technology-based firms in the Cambridge cluster
• 57,000 people are employed in these companies
• 26 per cent of people work in the knowledge intensive economy (12 per cent nationally)
• 90 University of Cambridge affiliates have won the Nobel Prize since 1904
• In 1990 there were no $1bn companies in Cambridge (by market capitalisation)
• Now, 14 $1bn companies had been created - Abcam, ARM, Autonomy, AVEVA, blinkx, CAT, Chiroscience, CSR, Domino, Ionica, Marshall, Solexa, Virata,
• ARM’s market capitalisation has more than doubled from $10 billion in 2012 to $20.7bn at the time of writing
• £250m+ current revenue of Cambridge cluster firms founded by University of Cambridge Computer Lab alumni
PHOTOGRAPH SHOWS: Victor Christou, senior investment director at CIC. Photograph courtesy: Cambridge Innovation Capital