Giving New Ideas the Wings to Take Flight
Six part Q&A with Michael Anstey, Partner, Cambridge Innovation Capital
1. As a preferred investor for the University of Cambridge, CIC provides the runway and follow-on Series A funding for emerging spinouts and start-ups to lift their initial ideas off the ground. Why is this important from a perspective of commercialisation, and what happened before CIC existed?
If we look at the-Cambridge ecosystem as a whole, there are several key sources of innovation. The University of Cambridge is at the centre of the ecosystem and is recognised as one of the most entrepreneurial universities in the world. In addition to the University, there are multiple research institutes, accelerators and multinational companies translating globally important science in Cambridge. The pain points and capital requirements that start-ups originating from Cambridge face are much the same as elsewhere in the UK.
At creation, nascent companies are really focused on getting proof of concept of their idea and ultimately finding a way to protect that idea through intellectual property. At this stage there are lots of sources of funding, in the form of government and academic grants, as well as seed investment. The University of Cambridge has a seed fund itself, providing £500,000 to £1 million to activate these companies and launch them off the ground.
From there, there are other priorities to think about: team-building; securing the appropriate advice and expertise; R&D capabilities; operations; and business strategy. This requires growth funding, and it’s this that CIC provides, enabling those start-ups to spread their wings.
Before CIC there was a shortage of growth funding in Cambridge. Companies would be forced to exit earlier than they should, meaning that these pioneering innovations would get acquired by large multinational corporations. Cambridge was at risk of being a technology exporter, rather than achieving its full potential as a global company-builder. CIC was created to address this.
2. How does CIC’s relationship with the University of Cambridge ensure that good ideas don’t slip through our fingers?
The University was very forward-thinking in finding ways to fill the funding gap. This is where we’ve stepped in – setting up an independent venture capital fund through a collaboration agreement with Cambridge Enterprise.
Cambridge Enterprise’s mission is to help academics to commercialise their ideas. This is a social-driven mission, and CIC supports this by being profit-driven, plugging the funding gap for greatly needed growth capital while creating consistent returns for our investors. We’re fortunate to have this privileged relationship with the University and its spinout enterprises, as the trusted investor in these emerging opportunities as they arise. This enables us to have a different but symbiotic vision that the University is seeking to achieve.
The way this relationship works in reality is that we feed in our network, provide strategic advice at creation to build out the appropriate foundations; develop fundraising strategies to look three or four steps ahead, and offer ongoing collaboration as these businesses evolve. This is not just about funding, but easy access to the ingredients required to accelerate growth in a seamless and organic way.
3. What are some of the challenges involved in the life cycle of company growth and outlook?
All companies come up against the same three challenges:
The ability to attract talent – human capital is a scarce resource, and yet this is the lifeblood that takes innovation further. CIC seeks to relieve that issue by leveraging our network and connections, and by being hands-on in team-building.
Financing risks – companies fail when they’re drip-fed capital. If they’re not given sufficient funding to grow and scale at pace, we can only expect to be technology exporters for the long-term. CIC provides the pathway for start-ups and spinouts after initial seed funding, to get good ideas off the ground.
Adopting a global outlook – nascent enterprises must be able to connect to partners, customers, investors, and capital markets, to achieve their full ambition. CIC introduces these companies to a network that is local and global in reach, to take advantage of these opportunities.
When you bring in these ingredients simultaneously, exciting things happen – as we have seen with many of the start-ups that we have invested in over the last few years.
4. What is it about the Oxford-Cambridge Arc that attracts the best of enterprise, talent, and investment?
The Arc is a fantastic place in which to innovate. It can facilitate collaboration across a wider geographical scope than we see elsewhere in the UK. It eliminates the need for enterprises, investors, and domestic and overseas specialists to choose between several ecosystems, Oxford, or Cambridge, for example, when dipping into each of these to select the best resources.
Engagement with a single, coordinated supercluster is where the Arc can be extraordinary. This enables the seamless movement of people across the Arc – the most scarce resource there is right now – and the more we can move people across the region and eliminate the choice between insular ecosystems, the greater the mixing of ideas and integration that is possible.
It also creates the platform to compete at a global level. We will lose if we don’t have sufficient scale in our offering. Cambridge or Oxford alone can be seen as subscale. Together we achieve scale, and can be extremely competitive with other global ecosystems, like the Boston and Bay area.
Finally, looking at Cambridge as an example, there is a lot of structure and resources for companies to grow through the first couple of years of their life. But as they scale, they require a greater footprint to expand their manufacturing and other large-scale activities. CMR Surgical, a globally-leading robotics company that has its HQ in the centre of Cambridge and is building a new manufacturing facility in Ely, is a perfect example. It has benefited enormously from a cross-regional supportive ecosystem that keeps growing companies. The Arc offers this opportunity.
5. Is there anything missing from the Arc’s R&D and investment ecosystem? How does this make it harder for new innovation to grow and scale?
There are two things that come to mind:
The Arc needs coordination – not top-down governance, but coordination, something akin to the work that Cambridge& does across the Cambridge region. Cambridge& exists for the benefit of the Cambridge ecosystem, doing its best to bring together a complex ecosystem to have a coordinated offering to external partners. The Arc needs a similar coordinating organisation or body to bring a single offering to domestic and overseas investors, to convey what the Arc can offer.
The Arc needs Government support – the aspiration to make this a global supercluster and a leading innovation geography will only work if there’s appropriate infrastructure in place, from funding, to transport, to housing.
6. Within your portfolio, what have been some of CIC’s greatest success stories, and how can we make more of these within the Arc?
I’d like to touch on three success stories from within our portfolio:
CMR Surgical – an extraordinary example of a company that has harnessed all that the Arc ecosystem has to offer when it comes to finance, talent, and infrastructure, to create arguably one of the world’s leading robotics companies. When the Arc works well across these dimensions, these companies give back to the ecosystem in unprecedented ways.
Sense Biodetection – a pioneering next generation testing platform which will be highly disruptive in the way we think about molecular testing. The company has dual HQs in Cambridge and in Oxford, setting up in those locations to enjoy the resources at both ends of the Arc. Sense is doing what many companies could be doing if the Arc was coordinated, constantly moving back and forth across the Arc’s geography.
Gyroscope Therapeutics – now a transatlantic gene therapy business with its HQ in Cambridge deliberately located there to benefit from its resources. Leveraging those resources is one of the reasons why it’s a ‘unicorn’ company valued at over $1bn.
The common thread of these three companies is that CIC is the only local investor in these organisations, providing funding over multiple rounds, team-building support, and acting as a gateway to fully benefit from the Cambridge ecosystem. We’d like to think we’ve played an important role (but not the most important!) in their success stories. I’m certainly very proud of what CIC has been able to help them achieve.
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