Cambridge VC Launches $126M Fund to Retain Startups

The U.K.’s Growth Funding Landscape and a New Investment Fund

A common observation is that the United Kingdom and the broader European continent experience a shortfall in substantial growth funding for more mature startups, when contrasted with the resources available in the United States. This assessment is, in fact, accurate.

Data from the European Investment Fund indicates that the U.S. boasts at least seven times the number of large-scale venture capital funds compared to Europe. Therefore, the launch of a new growth fund within the U.K. represents a noteworthy development.

Cambridge Innovation Capital Launches £100 Million Opportunity Fund

Cambridge Innovation Capital (CIC), an investment firm focused exclusively on the Cambridge ecosystem surrounding the renowned university, has introduced a new £100 million ($126 million) “Opportunity Fund.” This fund is specifically designed to provide growth-stage capital.

CIC currently manages investments totaling $757 million across over 40 companies and maintains a strong, collaborative relationship with the University of Cambridge.

Fund Anchored by Major Investors

The fund’s initial investment commitments are being led by Aviva Investors and British Patient Capital. Its investment strategy centers on growth-stage companies operating within the deep tech and life sciences sectors.

Initial Investments Already Deployed

Two investments have already been finalized. Pragmatic Semiconductor, a significant player in chip design and manufacturing, has secured $389.3 million in funding to date. Riverlane, a company specializing in quantum computing error correction, has raised $120.7 million.

Addressing the U.K.’s Funding Gap

The new CIC fund is designed to allocate up to £20 million ($25.2 million) per investment in subsequent funding rounds for deep tech and life sciences ventures. A primary objective is to mitigate the U.K.’s persistent funding gap for later-stage startups.

This gap frequently results in these companies relocating to other nations, most commonly the United States, in pursuit of necessary capital.

Government Initiatives to Boost Tech Ecosystems

Recognizing this challenge, the U.K. government recently unveiled its “AI Action Plan” last month. This plan encompasses a series of initiatives aimed at stimulating economic growth through artificial intelligence.

A key component of the plan is a commitment to establish Europe’s equivalent of “Silicon Valley” by bolstering the existing technology ecosystems around the universities of Oxford and Cambridge.

Furthermore, the “Golden Triangle” – encompassing London, Oxford, and Cambridge, and including five leading U.K. universities – will receive enhanced connectivity, including improved transportation infrastructure, alongside a substantial £14 billion funding package.

CIC’s Evolving Investment Strategy

Andrew Williamson, managing partner at CIC, explained in a conversation with TechCrunch that the firm historically focused on early-stage companies within the Cambridge area. However, many of these companies have matured and developed proven technologies.

“In the past, when our portfolio companies reached Series C funding, we lacked sufficient capital within our core funds to participate in those later-stage investments,” he stated.

“We previously offered these opportunities as co-investments to our Limited Partners. However, many financial institutions are not structured to make direct investments into companies. This fund was created to provide a vehicle for their participation.”

Alignment with Government Objectives

Williamson also noted that a key directive from the U.K. government to the British Business Bank is to resolve the shortage of late-stage capital for scaling companies. “This fund directly supports that goal, anchoring new growth funds like ours.”

He added that Aviva, as a signatory to the Mansion House Compact, is committed to allocating pension fund capital to productive growth assets.

Successful Exits from CIC’s Portfolio

CIC’s portfolio includes several successful exits, such as the sale of gene therapy company Gyroscope Therapeutics to Novartis for $1.5 billion. Other notable exits include the $285 million acquisition of PetMedix by Zoetis, the $390 million sale of Inivata to NeoGenomics, and the sale of Audio Analytic.

Cambridge: A Hub for Innovation

Cambridge is widely recognized for its contributions to the technology sector, having produced prominent companies like ARM Holdings, Abcam, Darktrace, and Bicycle Therapeutics.