The Cambridge effect

June 25, 1999

Most of the firms in Britain's 'Silicon Valley' are Cantab creations. Kam Patel reports

Cantab Pharmaceuticals, a Cambridge University spin-off established ten years ago, has emerged as the fastest growing technology firm in the eastern region, a ranking based on percentage growth for the three years 1995-1997.

The company, based at the university's science park, specialises in developing treatments for infectious diseases, cancer and addictions. Its top position has emerged from a comparison by consultant Deloitte and Touche of the fastest growing 50 high technology companies in Silicon Valley in the US and its closest match in the UK, the eastern region centering on Cambridge.

It is the first time Deloitte has included the eastern region in its "Fast50" programme for tracking high technology companies. The programme was launched originally in 1995 to study companies in the US's Silicon Valley.

The eastern region Fast50 was carried out Deloitte and researchers at Cambridge University's Judge Institute. The Silicon Valley Fast50 ranking is led by OmniCell Technologies, followed by Incyte Pharmaceuticals and Pointcast.

Many of the 50 companies in the eastern region's ranking, while not directly university spin-offs, are second and third-generation results of ventures launched by them.

Walter Herriot, director of Cambridge's St John's Innovation Centre, says the majority of companies in eastern region Fast50 rankings "owe their origins directly or indirectly to Cambridge University".

Cantab Pharmaceuticals is a direct university spin-off, but ARM Holdings, ranked 14, Cambridge's first billion-dollar company, is a spin-off from Acorn Computers, established in the late 1970s by Hermann Hauser, after he had just completed his PhD at the Cavendish Laboratory. Its microprocessor technology is the probable basis of a future generation of portable computers and communicators.

Domino Printing Science (ranked 49), which has spawned 12 spin-off companies, originated from Cambridge Consultants, another university spin off. Diomed Developments (ranked 30) was formed by PA Consulting.

For entry to the Deloitte Fast50 rankings, companies must have been in business for a minimum of three years and generated a turnover of at least Pounds 50,000 in 1995.

A key finding of the study is that high technology companies in the United States have more than six times the turnover of their United Kingdom counterparts. Ninety-three per cent of US firms had a turnover of above $25 million compared with 21 per cent of UK companies.

Melissa Naple-Betz, business adviser at Deloitte, says this can be partly explained by the size of the US consumer market, with 250 million people compared with 60 million in the UK. She adds: "If growth equals success then when it comes to growth, size matters - UK companies need to compete globally to compete at all."

The study also finds that UK companies trade more profitably than their US counterparts. Sixty per cent of US companies analysed showed a loss compared to six per cent of the UK firms.

Ms Naple-Betz suggests that US firms' greater investment in R&D and marketing could explain the huge gap. By contrast, UK companies are under pressure to trade profitably to attract investors and support dividend payouts to shareholders.

Venture capital is a major source of financing for the small but growing high technology sector, including university spin-offs, in both countries. These funds have grown rapidly during the 1980s, but are more readily available in the US than the UK, says the report.

In 1996 the venture capital industry in the US farmed out $9.4 billion, concentrating mainly on clusters of high technology companies. Sixty-five per cent of the funding was deployed in just three states: California, Massachusetts and New York. The software, hardware and biotechnology sectors received 24 per cent, 12 per cent and eight per cent of the total funds available.

By contrast, the venture capital industry in the UK made just $3.75 billion available in 1996. Only 5 per cent of the funds went into computer-related industries, the main areas of investment being machine tools, clothing and other consumables.


Cantab Pharmaceuticals

Celsis International

Life Science Resources




E D White and Co


Modular Technology



OmniCell Technologies

Incyte Pharmaceuticals



International Network Services

Netcom Online Communication Services

E*Trade Group

Vantive Corporation

Arbor Software


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