Original URL: http://www.theregister.co.uk/2007/11/15/cambridge_cluster_is_rubbish/

Silicon Fen fails to soak up web 2.0 cash

Cambridge loses out to London

By Christopher Williams

Posted in Small Biz, 15th November 2007 12:17 GMT

Cambridge's status as a top European incubator for technology ventures is under threat because it has failed to get under the recent hail of cash chucked at web companies, warn figures out today.

The share of European technology venture capital dished out in Silicon Fen has plummeted from 9.3 per cent in 2005 to 5.6 per cent in the first half of this year, according to Library House's Cambridge Cluster Report.

"This can be largely accounted for by a structural shift in the direction of venture funding towards so-called 'soft innovation', in particular the service and retail sector, which can be closely related to the emergence of web-enabled products and mediatech," the authors write.

Silicon Fen's natural bread and butter thanks to the university is "hard" technology, such as chip maker ARM and biotech ventures, which require big money to get started.

The report complains that Cambridge's steep property prices put off too many cash-strapped early stage tech companies and young talent. Library House calls for "modest expansion" of the compact city, which would likely be fiercely opposed locally.

The drop in Cambridge investment has, however, been accompanied by a rise in capital splurged on web entrepreneurs in London - a city not known for its bargain housing. In startup land, big money sell-offs like Last.fm, based in Shoreditch, are bound to attract similar ideas.

To remain relevant, Silicon Fen needs to become more integrated with the wider technology scene in the South East, the Cluster Report authors argue. We wrote at length on the issues in summer.

Of course it's worth noting that if and when web 2.0 goes titsup, Cambridge will have mitigated its economic exposure by sending the net kids to the big smoke.

The Cambridge Cluster Report is free here, but you'll have to register. ®