The Launch of the Opportunity Fund

Cambridge Innovation Capital (CIC), which invests exclusively in the Cambridge ecosystem in and around the famous university, has launched a new £100 million ($126 million) “Opportunity Fund,” essentially a growth fund. CIC has $757 million invested in more than 40 companies and has a privileged relationship with the University of Cambridge.

Investment Focus

The fund is being anchored by Aviva Investors and British Patient Capital. It will invest in growth-stage deep tech and life sciences companies. Two investments have already been made. Pragmatic Semiconductor is a large chip designer and manufacturer that has raised $389.3 million to date. Meanwhile, Riverlane is a quantum computing error correction company that has raised $120.7 million.

The new CIC fund will invest up to £20 million ($25.2 million) per investment into the later-stage funding rounds of deep tech and life sciences companies. The hope, of course, is to address the U.K.’s long-standing funding gap issue for later-stage startups, which tends to lead to a drain of those companies toward other countries, usually the U.S.

Government Initiatives

In part, it’s this issue that led the U.K. government to announce last month its “AI Action Plan.” This plan includes a series of measures designed to grow the economy using AI. It also included a pledge to build Europe’s “Silicon Valley” by supercharging the existing tech ecosystems around the famous Oxford and Cambridge universities. Additionally, the “Golden Triangle” of London, Oxford, and Cambridge, comprising five leading U.K. universities, will also receive greater links, including transportation, alongside a package of £14 billion in funding.

Insights from CIC

Andrew Williamson, managing partner at CIC, shared insights with TechCrunch over a call. He noted that CIC had traditionally invested in early-stage companies around Cambridge. However, many of these companies are maturing into proven technologies.

“Historically, what we’ve done is when our companies get to Series C stage… we didn’t have the capital in our core funds to make those [later-stage] investments,” he explained.

“So we used to offer them as co-investment to some of our LPs. But not many institutions, particularly financial institutions, are really set up to make direct investments into companies. So the genesis of this fund was one they could participate in.”

Addressing the Funding Gap

Williamson added that one of the key directives from the U.K. government to the British Business Bank is to address the later-stage gap in scale-up capital. “So this is a perfect mission for what they’re looking to do, to anchor new growth funds like this. In the case of Aviva, they’re one of the signatories of the Mansion House Compact. This involves allocating some of their pension fund capital into productive growth assets.”

Successful Exits

Exits from CIC’s portfolio include the sale of gene therapy company Gyroscope Therapeutics to Novartis for $1.5 billion. Other notable exits include the $285 million acquisition of pet treatment developer PetMedix by Zoetis, the sale of liquid biopsy platform Inivata to NeoGenomics for $390 million, and the sale of sound recognition developer Audio Analytic.

The Cambridge Ecosystem

Cambridge is best known for producing several significant companies, including ARM Holdings, Abcam, Darktrace, and Bicycle Therapeutics. The launch of the Opportunity Fund is a promising step toward bolstering the ecosystem further.

In conclusion, the establishment of the Opportunity Fund marks a pivotal moment for the U.K. startup landscape. It aims to bridge the funding gap and support the growth of innovative companies in deep tech and life sciences. This initiative not only enhances the investment landscape but also reinforces the U.K.'s position as a hub for technological advancement.

With the right support and funding, the future looks bright for later-stage startups in the U.K. and Europe.