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TMT insights: How Cambridge became the UK’s leading tech city

Cambridge has been named the UK’s regional tech capital.

Key takeaways:
  • Access to talent and finance, as well as excellent research facilities, continue to boost this competitive global hub

  • Innovation drives an ever-growing cohort of evolving, cutting-edge tech firms, ranging from small players to multinationals 

  • An established venture capital (VC) network stimulates start-ups and scale-ups as regional investments increase against a backdrop of government support 

Though perhaps best known for its world-renowned university, the city of Cambridge has developed into a global centre of technical innovation.

Its evolution has been ushered in by a combination of factors, like high levels of VC funding, and the number of unicorns (tech companies worth more than $1bn – or £740m) and ‘soonicorns’ (companies hotly tipped to be unicorns) based there.

Neil Bellamy, Head of Technology, Media and Telecoms (TMT) and Services for NatWest, says: “Cambridge has some key elements that tend to be common to innovation clusters – world-class universities, talent, research facilities and access to capital. In terms of funding, it’s got a well-established angel and VC network, and the tech environment there is well supported by central and local government.”

Prospering from investment

According to statistics released in December 2021 by the Department of Digital, Culture, Media and Sport, more money than ever is flowing into tech companies in cities like Cambridge – £29.4bn this year, up 2.3 times from last year’s figure of £11.5bn. 

And almost £9bn of all VC capital invested went into start-ups and scale-ups outside London and the South East, according to the figures.

The regions outside London are home to nine of the 29 unicorns formed in 2021 and the combined value of UK tech companies founded since 2000 is now £540bn – with 2021 being the biggest year-on-year increase since 2013/14.

Tech firms accelerate growth

Cambridge has a long history of technical innovation, with companies like Acorn Computers and Sinclair Research being headquartered there during the very early days of the personal computer boom. 

Having large employers and large, established businesses is important. It develops the support framework for the rest of the ecosystem

Neil Bellamy
Head of TMT and Services, NatWest

Nowadays, the city and its surrounding areas have earned the nickname ‘Silicon Fen’ and play host to dozens of high-growth success stories, including cyber-security firm Darktrace, self-driving software developers Five AI, and semiconductor experts Arm. Cambridge is also home to many well-known multinationals, like Microsoft, Toshiba and Amazon. 

“Having large employers and large, established businesses is important,” says Neil. “It develops the support framework for the rest of the ecosystem.”

Unicorn capital of Europe

A recent report by Beauhurst (Unlocking Growth, 2021) listed Cambridge as one of the key centres for innovation in the UK, with a huge 79% (228) of companies in the area operating in the tech sector, employing 3,300 people.

And the city was recently named the ‘unicorn capital of Europe’ in terms of the number of unicorns per inhabitant, according to research from VC firm Atomico. An impressive capital investment network operates in the area, including firms like Parkwalk Advisors, locally founded Cambridge Angels, and Cambridge Enterprise – the commercialisation arm of Cambridge University.

Access to talent is key for growth

NatWest’s TMT Sector Relationship Manager for Cambridge, Steve Cook, says the types of tech companies being started in Cambridge has changed over the past seven years. 

“Previously we saw a lot of companies building software packages for government bodies, robotics, CAD [computer-aided design] software and audio-visual applications. Now, we’re seeing an increase in energy savings monitoring technology, ecological recycling applications, data analysis in one form or another, and health tech. 

“Having access to talent is key,” adds Steve. “But because there are so many tech companies here, there’s actually a shortage. Everyone gets snapped up very quickly, so it’s difficult for firms to recruit.”

Steve says it would be very hard for other cities to replicate Cambridge’s success because it has such a unique combination of factors. But the city could soon have competition from other tech centres like Edinburgh, Manchester, Glasgow and Bristol.

This material is published by NatWest Group plc (“NatWest Group”), for information purposes only and should not be regarded as providing any specific advice. Recipients should make their own independent evaluation of this information and no action should be taken, solely relying on it. This material should not be reproduced or disclosed without our consent. It is not intended for distribution in any jurisdiction in which this would be prohibited. Whilst this information is believed to be reliable, it has not been independently verified by NatWest Group and NatWest Group makes no representation or warranty (express or implied) of any kind, as regards the accuracy or completeness of this information, nor does it accept any responsibility or liability for any loss or damage arising in any way from any use made of or reliance placed on, this information. Unless otherwise stated, any views, forecasts, or estimates are solely those of the NatWest Group Economics Department, as of this date and are subject to change without notice.

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