Is Cambridge under threat? It is not something they like to talk about, neither town nor gown. But London’s emergence as a tech superpower has made Cambridge start to look a bit, well, puny. The once mighty SiliconFen, UK capital of all things clever and complicated seems to have lost out to Shoreditch’s march on all things beardy and brilliant.
Deloitte’s Fast 50, which tracks the country’s hottest tech companies, had a nasty surprise for Cambridge this year.
The report, which monitors the country’s fastest-growing tech companies based on revenue growth in the last five years, showed that in the course of 15 years its share of the brightest young things had quartered. In 1998, ironically the year Google was founded, the East of England boasted 16% of the fastest growing tech companies. This year, it had shrunk to 4%, a level at which it has stumbled along for the past three years (see bar chart below).
London, on the other hand, had gone the other way. Its share had quadrupled, from 16% to 64% a whopping two-thirds of the UK total.
Are the bright young things simply being siphoned off down the M11?
London’s Tech City, the fastest-growing tech cluster in Europe, has bagged more than its fair share of tech companies. With clever, cool marketing and more importantly, something Cambridge could not boast – space – since 2010 it has become home to 1,300 companies.
Cambridge agents have kept a close eye on its progress. Tech City says the majority of its occupants come from abroad. Since April last year, 50% of the overseas-owned companies setting up in Tech City have their global HQ in the US, says Pru Asby, head of partnerships at Tech City. The rest are mainly from Germany, Australia, Portugal, Spain or India. What those statistics don’t say is if Tech City was their first stop in the UK. Juliette Morgan, head of property at Tech City, says: “I have seen a handful of Cambridge companies head this way but they did not say it was because of lack of access to space up in Cambridge.
“It is all just testament to the fact that London is a great place to start and build (and exit) a tech company. The concentration of talent, capital markets and specialist advisers is here… and the real estate market is significantly bigger so can accommodate and absorb tech companies.
“There is no shortage of talent in Cambridge but it is true that the two cultures are different,“ she adds.
Cambridge agents admit this.
“It is those trendy media types that Cambridge is struggling to hold on to,” says Phil Woolner at Cheffins, adding “The type of companies that start at university now no longer need that funding and London becomes a real draw.”
London’s attraction is undeniable. Deloitte director Chris Lewis says that plummeting percentages of tech firms in the rest of the UK are not about London cannibalising the regions, but about the capital winning more tech mandates and increasing the overall amount in the UK. That means while tech might still be growing in the regions its share is diluted.
“Cambridge should not feel aggrieved, and there is still a lot of good stuff going on in it, but London is the global centre of the universe when it comes to tech companies at the moment,” he adds.
Is Deloitte surprised by the results? “No, not at all. Cambridge had a successful period but it has attained equilibrium. There is nothing to say there might be phase two, and it will do brilliantly, but it is just not Cambridge’s moment.”
But salt was well and truly rubbed into the tech wound when internet company AlertMe.com, one of only two East of England companies to make this year’s Fast 50, and the number three in the UK, proudly announced last autumn it was moving from Silicon Fen to Tech City.
A statement released at the time said its move to Tech City was “an opportunity for us to tap into the great technology skills, innovation and entrepreneurial talent.” Was that a nice way of saying they could not find those things in Cambridge?
The company is quick to dismiss this, saying out of its 80 people, Cambridge remains the largest group. Around 20 are permanently based in London, and a handful in the US, although there is a lot of movement between its sites.
“We plan to remain colocated in Cambridge and London – we think this gives us the best of both worlds,” says Jody Haskayne at AlertMe.com.
Haskayne adds: “The Tech City area offers a significant gravitational pull for both entrepreneurial young tech companies and the very large ones like Google, Amazon, Cisco.”
But Alertme.com’s movements might make some uneasy. To make this strategy work the business has gradually moved in from a CB5 postcode towards the city centre. In 2012 it moved itself into Brookgate’s CB1 scheme within spitting distance of the station and spitting distance of London.
Cambridge begins to creak here. Development sites in the centre are few and far betweenand the problem is those smart new companies generally want to be in the city centre.
Jamie Green at Juniper Real Estate says: “They want a thriving buzzy atmosphere and stock is limited in the city centre.”
The lab market is beginning to pick up, adds Green, and despite a very quiet start in 2013 the second half saw a resurgence. “We will see it go from zero to hero this year and in three months’ time there will be a few more zeros in that take-up,” he adds.
That has meant the very thing most cities would love: a tight jobs market.
“It is not that easy to recruit here, it is a tight market for biotech, especially now Astra Zeneca is here, so maybe it is easier to recruit in London,” says Green.
This is where most of the agents agree. Talent, space and a heated housing market means the city needs a cohesive long-term plan. Enter Cambridge Ahead, an organisation set up last year to bring business and academia together and featuring a glittering cast of Cambridge’s great and good on its committee.
“Cambridge has been a victim of its own success and we need a plan for the next 30 years,” says Patrick McMahon, senior partner at Bidwells and a member of the Cambridge Ahead board.
“Cambridge Ahead isn’t there to solve a problem. It is to plan ahead and to make sure it gets even better.”
Indeed the organisation has been talking to Baroness Valentine of London First to see how the two could help each other.
Cambridge agents have always said that a dominant, strong London can only help Cambridge with its close, quick rail links to the capital. And much has been made of the Cambridge-London corridor with one quipping – “I thought these days that Cambridge was referring to London as south Cambridge anyway.”
But others think that the city might have a problem. “Cambridge is very good at early-stage discovery, growing companies to four or five people, but at that stage it is relatively easy to move and at the moment they do move away, they move to New York, to San Francisco, to London,” says Stewart McTavish, the founding director of ideaSpace at the University of Cambridge.
”We need to help them become 20-25 people in Cambridge, because then it becomes hard to move. We need people to grow roots and become established here.”
It’s McTavish’s job to take raw ideas from academics and support them through a business development phase to build a team and create a company. At the moment ideaSpace is operating at capacity and has been for about three years.
The problem is that while Cambridge has no shortage of bright ideas, it has a real shortage of space to put the companies in once they go out into the big, bad world. He believes that what Cambridge needs is to double the size of the innovation centre “that would solve all my problems”.
Could funding or a few brave developers make the difference and turn Cambridge’s future around? McTavish offers a ray of hope: “I don’t think it’s any single party. The building blocks are here, we need a cohesive vision. There are moments when that happens, like the Cambridge phenomenon which led to the tech boom, and I think Cambridge is on the cusp of another one of those booms.”
Nadia.Elghamry@estatesgazette.com
