Cambridge is swiftly challenging London’s position as the UK’s premier technology hub, driven by its biotech and deep tech ecosystem. While London is home to tech giants like Wayve ($1.3B in funding), Improbable ($864M), and Arrival ($631M), Cambridge’s rapid rivals tell a story of innovation and growth. The city’s tech and life sciences companies have raised over $892M in VC funding this year — a 38% increase from 2023 — producing 16.9x in value for every dollar of VC investment, surpassing the UK (5.4x) and London (4.8x).
We spoke with some of the UK’s most promising technology startups to understand Cambridge’s rising prominence as a deep tech innovation hub. Here’s what we discovered.
The power of university spinouts
Cambridge now boasts over 20 companies valued at over $1 billion, including industry leaders Featurespace, ARM, Xaar, and Abcam. At the core of this success is Cambridge Enterprise, the University’s innovation arm, which excels at translating academic research into scalable ventures. Their recent collaboration with Parkwalk Advisors led to the establishment of the University of Cambridge Enterprise Fund X (UCEF X) — their tenth such fund — building on £26.8M previously raised for University spinouts.
Speaking specifically, Cambridge’s spinouts leverage cutting-edge research to create new technologies, products, and services, which mostly lead to the future development of unicorns, adding nearly £30 billion annually and supporting over 86,000 jobs across the UK. Take Ikarovec, a second-generation spinout from Quethera, a Cambridge University offspring.
In a conversation with TFN, Katie Binley, Chief Scientific Officer of Ikarovec, explained: “Since Ikarovec originates from a University spin-out, we have been able to benefit from and maintain connections and a network with the University to support gene therapy development, including access to specialist equipment, facilities, and academic groups.”
Like their European counterparts, Cambridge spinouts encounter unique challenges in funding and commercialisation. Chris Torrance, founder and chair of PhoreMost and founder of Horizon Discovery, gave TFN a crucial insight with TFN: ‘Focus was key for PhoreMost. By concentrating our SITE-SEEKER platform on targeted protein degradation — an emerging concept in pharma—we quickly established leadership in ‘Drugging the Undruggable’ research.’
Binley also added her perspective on the common challenges:” Gene therapies are advanced medicinal products that take a long time and require significant investment to reach the clinical stage. The key is to establish an effective team and a clear development plan with critical inflexion points that add value at every stage of development. The aim is to attract the funding and scientific expertise required for the gene therapy to reach clinical trial.”
To address early-stage hurdles, Cambridge Enterprise Funds, managed by Parkwalk (the UK’s largest growth EIS Fund Manager with £500M AUM), created UCEF X. Dr Christine Martin, Head of Ventures at Cambridge Enterprise, shared with TFN: “There have been nine successful exits for UCEF portfolio companies, from the £28 million acquisition of Flusso in 2022 to the $383 million acquisition of Horizon Discovery. The other examples could also be the sale of Vocal IQ to Apple in (2015) and, most recently, the sale of Versed-AI to Exiger (2024).”
AI and IVF: Cambridge’s two key innovations
Two technologies dominate Cambridge’s innovation landscape: artificial intelligence and IVF. The University’s Institute for Technology and Humanity spearheads research into AI’s societal impact, spawning practical applications from heart disease detection in dogs to Alzheimer’s progression prediction and forest monitoring systems.
Moray Wright, CEO of Parkwalk, elaborated: “AI and Machine Learning are revolutionising life science and clean tech. Combined with quantum computing, we’re seeing unprecedented advances in everything from battery materials to personalised medicine.”
As the new Labour government prioritises economic growth as one of its most central missions, Cambridge is where some of the country’s most exciting prospects are becoming a reality. “Growth comes from the excellent global research undertaken at our world-leading universities. There is also growing cross-party governmental support for the sector. The risk lies in later-stage funding and losing the output of a deep tech innovation hub,” said Wright.
The Cambridge Enterprise Ventures team invests in the University of Cambridge capital into high-impact, high-growth Cambridge spinouts and startups. Over the lifetime of its funds, it has invested over £42 million in purposeful and successful University spinouts, which have collectively raised over £3 billion in follow-on funding since 1995.
Is the future of deep tech behind Cambridge?
Cambridge has firmly positioned itself as a global leader in deep tech, leveraging its rich academic heritage and innovative ecosystem to drive advancements across various fields. “In almost every sector, AI and machine learning will shape the future of deep tech. We continue to see better understandings of issues, be they drug targets, material composition, networks, migration, financial markets, all leading to better outcomes”, noted Wright.
Despite high R&D costs and lengthy development cycles, deep tech companies continue to offer groundbreaking solutions with substantial societal benefits. Dr Christine Martin, Head of Ventures at Cambridge Enterprise, concluded: “While world-class universities like Cambridge ensure a steady flow of innovative ideas, early-stage capital remains crucial for these fledgling businesses to thrive.”
In the race to become the UK’s premier tech hub, Cambridge’s unique blend of academic excellence, entrepreneurial spirit, and strategic investment is a winning formula.
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