Warning of 'disaster' for Silicon Fen

Cambridge, one of the most important European centres for fledgling technology companies, is suffering a relative decline with "disaster just round the corner", according to a new report.

Silicon Fen, as it is sometimes called, is weak in "soft-tech" ventures, such as internet companies. Start-ups are, meanwhile, hampered by high house prices and congested roads, which make it difficult for them to attract and retain promising young technologists.

The Cambridge Cluster Report 2007, published today, calls for a "modest" expansion of the city to help its internationally significant technology cluster to overcome growing capacity constraints.

However, even minor development of the historic Fenland settlement would be controversial. The Campaign for the Preservation of Rural England said: "The reality is that this would ruin Cambridge. The city is full."

Cambridge has produced a series of well-known technology businesses, such as Arm, the silicon chip designer; Autonomy, the software business; and antibody specialist CAT. But the report, produced by Library House, the Cambridge data business of technology investor Doug Richard, suggests London has become more important as a centre for fledgling technology companies. While Cambridge received the highest per capita venture capital investment in Europe last year, London is the largest innovation cluster in terms of total capital committed of more than £2.6bn.

According to the report "the Cambridge cluster appears to be declining in importance". A "dramatic" drop in venture activity this year had been accompanied by significant growth in London, it noted. Cambridge University declined to comment.

Gary Hanson, of BDO Stoy Hayward, the report sponsor, said: "There needs to be a greater awareness of what Cambridge should do to stay competitive. There is a historical tendency to be arrogant and expect people to come to us." Improving housing and transport infrastructure was part of the solution. He added: "The great and good spend a lot of time sitting around talking about this. Now they need to get on and do things."

Darren Harper, of Library House, said: "Cambridge is still incredibly strong in physical materials development. What it hasn't got is the creative industries element."

The flourishing London 2.0 internet media scene had put Cambridge in the shade. Mr Harper said the capital would inevitably lure web entrepreneurs. However, any broadening of Cambridge's specialisations would give it a deeper pool of marketers and managers to help it commercialise scientific research, he added.

The danger highlighted by the report is that Silicon Fen will stagnate, even as less constrained technology clusters, such as the Thames Valley, expand.

Housing costs 'prohibitive'

Simon Galbraith, co-founder of Red Gate, a fast-growing software start-up, says Cambridge is a "talent magnet" that attracts some of the brightest people in the UK, writes Jonathan Guthrie . But at the same time housing costs were becoming "prohibitive" to hiring some key staff.

Mr Galbraith, 35, studied physics at Magdalene College while his best friend Neil Davidson, a mathematician, was at Trinity.

They set up Red Gate, which produces trouble-shooting database software, in 2000. Mr Galbraith claims this proves they were "enormously deluded", given the high risk of failure. But Red Gate, which is based near Cambridge Science Park, has survived and thrived and now has turnover of £8m a year and 105 staff.

The entrepreneur says that house prices are a "burning issue" among business owners.

Return to Press Archive