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updated 10:55 PM BST, Apr 23, 2015
Technology and life sciences news from the Cambridge cluster

Cambridge entrepreneurship: top-down tech or grassroots ecosystem?

One common theme that can be picked up from various entrepreneurs, journalists and investors in Cambridge (the sentiments of which I have often shared myself) is the slightly bitter feeling that the city's entrepreneurial talent and potential is unjustly ignored in the allocation of central government enterprise funds across UK regions.

Last year, Cambridge missed out completely to the northern regions in our Local Enterprise Partnership's multiple bids to secure funding through the Regional Growth Fund (although more recently we have been allocated £10.7 million for Chesterton rail station infrastructure).

Cambridge Entrepreneur thought it would investigate a little further. Does Cambridge really get such a raw deal? If so, does it actually matter?

At first glance, the sentiments that many of us conveniently share in Cambridge do actually fly in the face of Experian Plc's recent 'Local Growth Research (pdf)' completed on behalf of the BBC, and as reported by the BBC here in March. This report shows that:

"The North East, Yorkshire and Humber, badly hit by the downturn, were found to have the highest proportion of fast-growing, export-focused firms."

Perhaps sometimes, then, we are a little too caught-up in our Cambridge bubble. The BBC article points out, correctly, that these are some of the poorest areas in the country, yet that they are displaying the highest potential for (export-led) economic growth in the UK.

Furthermore, in Experian's research these poor regions have proportionally the highest number of "business champions" - defined as young, small but high-growth firms that provide "two-thirds of all employment created by existing SMEs", have "directors that show entrepreneurial skill" and have an "international outlook". So presumably government money spent on development and incentives in these regions would actually be in the interests of the wider UK economy?

Well, how did Cambridge(shire) get on by comparison? Experian lists East Cambridgeshire as 14th out of all Local Authority Districts (LADs) in the UK, of which there are 326 in England alone, for business-based growth (growth in absolute number of businesses). However, an increase in the number of businesses gives no indication of the quality of growth.

Unfortunately, the East of England rates badly in terms of the number of "business champions". Really? Is this evidence in itself that the often conveniently London-centric BBC is ignoring the wealth of high-growth entrepreneurial talent in Cambridge?

South Cambridgeshire did pretty well, though, ranking first LAD for exporting businesses, with Cambridge City following at 27th and East Cambridgeshire at 38th. It then ranked as 33rd for sector-led growth, but Cambridge City was nowhere to be seen in the top 50 LADs. Again, really? The indicators that made up Experian's measure of sector-led growth are fairly questionable, starting with a big assumption:

"The sectors that Experian anticipates will grow over the short and medium term are largely within the financial insurance and business service sectors."

So what conclusions can we draw from this? Should Cambridge be taking more money from Westminster as against poorer regions in the north of the UK? Does London ignore Cambridge's entrepreneurial activity? Does that even matter?

Well, it does appear in this case that the BBC somewhat ignores Cambridge City, whilst it does, to some degree, recognise South and East Cambridgeshire (some of the Cambridge high tech 'cluster' is actually in South Cambs).

It is absurd to rank the East of England so low on "business champions" when we have some of the highest growth companies and greatest entrepreneurial talent capable of competing on the world stage, never mind within the UK. It would have been helpful to split the "business champions" down by district to show a truer picture, as with the other measures. It is also, frankly, absurd to miss Cambridge from the top 50 districts for sector-led growth.

So if the BBC is 'PC' about northern regions, what about the coalition government in Westminster? After all, they don't form policy on the basis of research undertaken by Experian. Do they? Well, actually Experian does provide research for the broader public sector, including central government departments.

Right. Well, what does the government say specifically about Cambridge and the sectors (hi-tech, software, biomedtech, cleantech) that it specialises in?

Well, Vince Cable is certainly a fan of the digital economy, with the recent launch of the 'Connected Digital Economy Catapult', one of the 'Catapult centres' that David Cameron announced in 2011. In fact, these Catapult centres, representing £200+ million worth of investment, were introduced by the Prime Minister in response to Cambridge entrepreneur Herman Hauser's report on the role of technology and innovation centres. However, Cambridge is yet to benefit from this, whilst northern or north Midlands regions such as Sheffield are first on the list.

There is also the somewhat frustrating way in which both politicians are quite happy to harp on about 'Tech City' (Shoreditch - Old Street, London) as the future vision for the European digital economy, without a mention of Cambridge, or, despite all Tech City's PR, quietly promote the M4 Corridor as Britain's 'Silicon Valley' since that is where a number of global tech heavyweights are based.

Yet if we actually take a closer look at Tech City, we can see that with Cambridge's 1,300 or so hi-tech firms that we vastly outstrip Tech City in high-impact global technology. We're not talking glitzy media and design agencies here (a significant proportion of Tech City). We're talking about world-leading, next generation wireless, semiconductor, software and biotechnology.

Yet the real question is whether Cambridge tech actually needs a top-down government strategy to direct its growth. Does it really need central government funds? Well, it would certainly be nice, since we missed out completely last year to the northern regions. However, in writing this article, we at Cambridge Entrepreneur wonder whether government funds are actually all that we sometimes implicitly assume them to be.

Allocation of funds is no guarantee of investment well spent on enterprise support. Funds need to be mediated through quality localised initiatives based on the locality's comparative advantage and specifically meet the needs of vulnerable small businesses, not wasted in confusing regional quangos.

However, there is a case for quality centralised support from a single focused body that is simple to use and feeds cash down to entirely grass-roots support agencies. At the moment research shows that as far as government investment incentives go, the majority of SMEs are not even aware of their existence, let alone use them, so they usually make little difference. Central government money can be very useful for infrastructure, but is perhaps less so for direct, top-down enterprise support.

This aside, what about Cambridge's entrepreneurial ecosystem? Is it possible that it is even partly or wholly self-sustaining without central government funds? I think it probably is. The Catapult centres are a case in point.

The government has taken the line from Cambridge on such innovation centres, via Hermann Hauser and the initial founders of the ground-breaking St John's Innovation Centre, for several years. They announce the High Value Manufacturing (HVM) Catapults, funded centrally, whilst Cambridge quietly gets on and introduces the UK's first HVM bootcamp that is, we believe, (almost) entirely privately funded!

Cambridge has matured in the last five to 10 years to produce a range of young and ambitious companies who, generally, no longer feel that "apologetic" sense of shame at the concept of commercialisation previously derived from the abstract intellectual mindset evidenced by large parts of academia. In short, Cambridge has grown up, commercially.

Now we have our own diverse ecosystem of networking groups, experienced mentors (the government's new online mentor scheme is a bit of a joke), angel investors, venture capital firms and the specific wealth and expertise of Cambridge University through the Institute for Manufacturing, St John's Innovation Centre and the Hauser Forum.

We can bounce our ideas off each other, for free, at Cambridge Pitch & Mix. All this has grown up 'organically'. Frankly, do we really need David Cameron's top-down tech? After all, Cambridge does have the "advantage of natural selection rather than 'intelligent' design"?

This is a guest blog written by Michael Niskin, Cambridge-based technology writer and director of Cambridge Writing Services. It first appeared on his blog, Cambridge Entrepreneur.