Lack of startup funding and support in Cambridge has IT CEO calling for Plug and Play incubator
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| Network support: It's not just IT that needs a strong support network according to Intergence CEO, Peter Job |
Though Cambridge is producing technology successes, Job believes there's a tendency for too much self-congratulation and that if you scratch beneath the surface there isn't enough support for startups in a city that claims major status as one of the world's leading innovation clusters.
This goes for a number of areas of the Cambridge cluster ecosystem according to Job, including the angel community, which he says is too risk averse.
Job, who has grown his own IT consultancy from zero to a £6m turnover company in eight years, recently spun out Real Stauts, an IT software firm with a gaming inspired visualisation tool.
Real Status has paying customers, has just launched its VMWare plug-in version and has raised $2m in angel funding, however, none of the money came from Cambridge despite several presentations to local investors.
Job says his wider concern is if a Cambridge company that has been incubated for two years, that is backed by a highly experienced management team and has paying customers can't raise money, then what chance the first time entrepreneur?
"If you haven't been through this process before and you're a young person fresh out of university that's got a great idea and some very good technology, the first thing you come up against is 'I've got to write a business plan, I've got to do this that and the other', it's a whole list of things that you have to know.
"The problem is the traditional angel investor is very often only interested once a lot of these things have been put in place, so it becomes a bit of Catch 22, a bit like your first job, when you're told to come back with some experience, but you can't get the experience if you can't get the job."
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| Peter Job, CEO of Intergence Systems |
This could provide a formal mentoring process, which Job says is lacking in Cambridge too. He believes a certain amount of philanthropy would be needed at the beginning to set it up, particularly with regards to a site for such a venture, be it an old empty office building or a Marshall warehouse or hangar.
"If we had a central area that would really encourage things, even if it was to offer some free consulting expertise because that's something I do think is missing. If the lawyers for example gave up some time free of charge once a month. If I was to get involved I could give free sales and recruitment advice."
Cambridge's investors will also need to be a little more daring, however says Job. "If there's all these hurdles put in their way about how they've got to do things and then they're going to take a huge amount of equity because - goes the argument - it's really high risk, then the investment community is far too risk averse."
His view is partly informed by the Real Status funding effort. The technology had been incubated for two years within Intergence, was local, had paying customers and was nominated as one of the 11 most exciting cloud computing companies at GigaOM's annual cloud computing and internet infrastructure event.
"I think the mistake we made is we thought that because we were a Cambridge company people in Cambridge would see that as a positive, but actually other people, the eventual investors, saw that as a positive, we've had no problems from any other part of the UK or Europe."
Risk is at the centre of the problem as far as Job sees it and it shouldn't be. He says the VC community is already suffering from an increased aversion to risk to the point that it has almost vanished and that's where Cambridge's investment community needs to come to the fore.
Job also sees a gap just above where the angel groups are funding, for companies looking to raise slightly higher amounts of money.
"The VC community in Cambridge tends to be looking at the higher value investments so we were stuck between the two," says Job. I think it's an issue that we tend to be a bit self-congratulatory about how well we're doing but I'm not convinced it's everything it seems to be on the surface.
"In the current climate raising money for slightly unusual technology ventures is a real challenge and I think that's where Cambridge should be stepping up to the plate more than they are.
"One of the angel groups in Cambridge claims to have raised £14m in the last 12 years, that's only a little over £1m a year, we've done that in one round of investment. If we're positioning ourselves as the leading technology clusters with bright new innovative ideas coming out, it's not a lot to put into technology."
The £14m Job is talking about is actually £16m and is on the Cambridge Angels web site, but Job is keen not to pick out any particular angel group or investor as he believes it to be a more generic issue.
"Compare that to the Valley where one angel group has raised $200m in 15 years and it gives you an idea of the difference in scale."
But is it fair to compare to Silicon Valley where in terms of sheer scale it outweighs Cambridge, a population of 110,000 compared to almost a million in San Jose and over 7 million in the wider San Francisco Bay area?
"I agree, that we shouldn't necessarily be comparing ourselves with others, however, the fact is the Cambridge community sticks its head above the parapet and says, 'We're a Cambridge technology cluster.
"If we're trying to attract investment into the tech cluster in Cambridge we need to be a little more outward looking rather than inward looking and be prepared to take a bit more risk."
Job says this means embracing new technologies, something Cambridge isn't necessarily completely at ease with, such as cloud computing. He gives the example of Bromium which he says had to set up in Silicon Valley so they could access US funding.
Despite his concerns, Job is not dismissive of Cambridge. He says he will return to Cambridge investors for two more products Intergence wants to spin out, he just won't be spending as much time as before.
For now, Job advises budding entrepreneurs in the Cambridge area not to dismiss the Cambridge community, just to make sure they also look elsewhere: "There's plenty of other places to raise money and we proved that to be the case."
