cambridge growth summit - kpmg › ... › 2020 › 01 › cambridge-growth-summit.pdfare too spread...

0 | Cambridge Growth Summit

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© 2019 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Cambridge Growth SummitKey takeaways for chief executives

Cambridge Growth Summit held at Granta Park

kpmg.com/uk

https://home.kpmg.com/uk/en/home.html


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1 | Cambridge Growth Summit © 2019 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Cambridge Growth Summit | 2

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Cambridge Growth Summit | 2© 2019 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Contents

The Times/KPMG Growth Summit 03

Key themes occupying Cambridge CEOs 06

TrendsDon’t think too big: ecosystems exist at a strictly local level

01

TechBe brave

02

TechFind investors who are interested in more than just the money

03

TechInvestors shouldn’t seek the finished article, but the idea

04

Trends Join the dots by collaborating outside your immediate sphere

05

Talent Start-ups are most effective if everyone has a stake

06

TechInvestors want founders who care about more than money

07

TalentDon’t be afraid to give young people responsibility

08

TradeThe UK’s export success depends on it remaining internationalist in outlook

09


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The Times/KPMG Growth Summit

After a decade convening FTSE chief executives at the Times CEO Summit in London, KPMG teamed up with The Times and Sunday Times in a new initiative, bringing together business leaders from around the country at four Growth Summits to plot new routes to a more inclusive kind of growth. The Cambridge CEO Growth Summit demonstrated how world-class academia can spawn a start-up and investor community that’s the envy of Europe.

How has Cambridge created one of the world’s most effective innovation ecosystems? That question dominated conversation at the fourth and final Times KPMG CEO Summit in the Cambridge and some of the answers could offer solutions for other parts of the UK seeking to emulate the city’s supercharged success.

Kerry Baldwin, Co-Founder of IQ capital – a deep-tech, early-stage and Series A investor – helped quantify the scale of the city’s success: “You've got over 61,000 people working in tech, over 5,000 (knowledge intensive) companies. You've got over 250 R&D centres here”.


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Spin out capital of Europe

Naturally, the University of Cambridge forms the lynchpin of the city’s ecosystem, however it’s only one part.

This highly innovative ecosystem is also a product of the city’s relatively modest size: Cambridge is the kind of place where scientists meet investors, who bump into engineers, who know start-up entrepreneurs. This melting pot makes Cambridge one of the best places in Europe to develop ideas, build a network of advisors, find investors and source talent – all building blocks to develop high-growth companies.

Pascal Soriot, CEO of Cambridge-headquartered Astra Zeneca, encapsulated this different ‘feel’ to Cambridge, in conversation with Times’ Business Editor Richard Fletcher: “You take your kids to play soccer on Saturday, or go to an event on the weekend, and you meet people from the University or from a biotech or a bigger company. That's how you create an ecosystem”.

In an upward and self-reinforcing spiral, large incumbents like AZ collaborate and partner with emerging tech start-ups and this level of activity entices yet more top talent to the city (many will already be studying here), says Amali de Alwis, UK Managing Director at Microsoft for Startups.

“Cambridge shoots well above its weight as far as the ability to draw in smart, driven, ambitious, inventive people from across the world is concerned”. Brexit had not had a noticeable impact on recruitment - certainly not when it came to finding scientists – said Soriot.

Incentivising academia

The University’s active role in helping academics spin out their ideas into businesses has been another central factor in fostering the area’s innovation ecosystem says Hanadi Jabado, from the Cambridge Judge Business School. Rather than standing on the side-lines, the University –through its commercialisation arm, Cambridge Enterprise – offers academics far greater incentives by allowing them to retain a greater slice of any profits, and their IP, than many other universities in the UK and US.

Attracted by the ideas, the people and the incentives, there’s then plenty of money keeping the ecosystem moving.

“On top of everything you get a very rich ecosystem of super angels and spin-outs of spin-outs (in Cambridge),” says IQ Capital’s Kerry Baldwin. “I'm looking at it as a venture capitalist. I’m looking for billion dollar companies.”

The abundance of funding stood in sharp relief with the first three summits in Bristol, Leeds and Glasgow where a lack of funding – or the right kind of funding – was acommon theme.

Replicating Cambridge’s success isn’t easy. As the place where Darwin wrote his theory of evolution, where the atom was split and where Crick discovered the structure of DNA, Cambridge has a reputation that’s taken 800 years to build.

Nevertheless, some elements of its ecosystem are transferable.


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5 | Cambridge Growth Summit © 2019 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.


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Key themes occupying Cambridge’s CEOs

1Trends

Don’t think too big: ecosystems exist at a strictly local level

AstraZeneca’s Pascal Soriot points to Boston as a centre of life sciences expertise or San Francisco for tech. Cities the size of London are too spread out, said Goncalo de Vasconcelos, Founder of SyndicateRoom, who is now developing an AI-powered insurance service, RNWL, “It just gets a bit too big to have that magical effect”.

2 Tech

Be brave

Simon Thomas, CEO of graphene developer Paragraf says “Cambridge has this great collection of professors that are quite happy to take quite big risks on sometimes quite crazy ideas. I think because the achievements of Cambridge have been so big in the past – just look at the Nobel Prize list – there's that grasp of if you take these risks, you can achieve these incredible things.”

“Science doesn't happen simply because one day someone wakes up and has all the answers to all the problems in the world. Science happens because people work, people share ideas, and work together.”

Pascal Soriot, Chief Executive Officer, AstraZeneca

3Tech

Find investors who are interested in more than just the money

What’s a bit different about the angel investor community in Cambridge is its willingness to offer help and expertise in specific areas like tech and biotech, says Cambridge Judge Business School’s HandiJabado: “It’s something I'm really big on -this nurturing capital that they bring with them. They're not just interested in giving you money. They're interested in giving you their time, their network and their ideas.”

Paragraf’s Simon Thomas stresses the importance of using investors as an informal network to gain advice and support. “If they don't know the answer to something, they know somebody in their network that could potentially help you.”

The relative ease with which start-ups can find funding was reflected in our audience polling. In contrast to “easier access to funding” – which were the dominant concerns in Leeds and Bristol – in Cambridge no one challenge dominated.

Which of the following would have the greatest impact in developing Cambridge’s start-ups?

A positive resolution A simpler, more to the Brexit impasse incentivised tax system

11%19%

Less regulation 4% A larger pool

26% of the talent you need

26%Easier access to funding 15%

A clearer regional development plan



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4Tech

Investors shouldn’t seek the finished article, but the idea

Not every academic sees things through a commercial lens says IQ Capital’s Kerry Baldwin. “We can work around that. What we have to see is a huge market, we have to see a thought leader and we have to see that passion.”

“The life sciences strategy here and the talent we can get is phenomenal. So as long as I get that and provide the company with growth, we'll continue to invest.”

Paula Dowdy, SVP, Illumina

5Trends

Join the dots by collaborating outside your immediate sphere

Hanadi Jabado says collaboration between departments is vital. “Don’t look at anything – be it material science or a biotech – inisolation and silos. You've got people fromthe philosophy department looking at it withthe ethical approach. That’s what makesCambridge so strong.

Nevertheless, Paula Dowdy, a SVP at genomics multinational Illumina and an American who’s been in the UK for 20-odd years says that while the UK is very good at individual science and computer science “we’re not always good at the crossing of those disciplines.”

6Talent

Start-ups are most effective if everyone has a stake

This was the view of FiveAI’s Stan Boland. When he sold his first company to a US chip manufacturer the smallest sum anyone made from the sale was £250,000 (which their part-time secretary picked up). But money should only one motivation he says: “One of the key ingredients of start-up companies is you must distribute equity across the whole company. People want to join a start-up because they're going to feel it's their company.”



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7Tech

Investors want founders who care about more than money

The investor community is changing says Tim Guilliams, CEO of Healx, which is using AI to find a cure for rare diseases. “Some investors now only invest in mission-led businesses, because they believe that's the future.”

Amali de Alwis says increasingly investors want to put their time and effort and money into supporting companies which have an impact on the world in more than just a financial sense: “If you're only in it for the money, it's a pretty poor strategy, right? Thinking about the number of companies which succeed, and the blood, sweat, and tears … there are easier ways to make money.”

In a poll of participants 81% strongly agreed with the notion that a company’s purpose is to benefit all stakeholders and customers, not just investors. That was the highest result at all four summit events.

To what extent do you agree that a company’s purpose is to benefit all stakeholders and customers as well as investors?

81%

19%

Strongly agree

Agree


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8Talent

Don’t be afraid to give young people responsibility

Stan Boland explained “One of the things that we've done, is to create a structure where we've got young, capable team leaders taking responsibility. It has really given people an opportunity, in their late twenties to take responsibility for a piece of something. And it has bubbled up an enormous amount of innovation.”

To find the right people in the first place, Boland says making sure lots of people meet the potential recruit is vital. “There is a collective discussion … so it’s really a kind of collective team decision when we hire or don’t hire.”

Underlining the importance of Cambridge’s highly-skilled knowledge economy, half of all participants prioritised “finding and hiring skilled staff” as their top workforce challenge – the highest result across the four regional summits.

What is your greatest workforce challenge?

Reskilling staff to thrive Creating a more diverse in an age of greater workforce and leadership

10% 10%

Keeping staff and meeting 30%their aspirations

50%

Finding and hiring skilled staff

9Trade

The UK’s export success depends on it remaining internationalist in outlook

Alex Loizou, Co-Founder of Trouva – an online platform selling homewares from independent shops around the world -explains that three in four of his employees speak two languages or more, and his 80-strong team are drawn from 19 countries. That has helped him start exporting to 12 countries outside the UK. “The reason why I came to London was because of the diverse environment that I was getting into. If we lose that, this is a major point where European talent will not come here anymore.”

David Slater, Director for KPMG’s international trade practice, says the multiculturalism of places like Cambridge and London has to be preserved. “If you're not culturally aware of how French business culture works, you cannot do business effectively with France,” he says.

In terms of which overseas markets to target, Cambridge-based companies appear to be looking further afield with almost a third saying China was the greatest revenue opportunity (more than double the average rate in Glasgow, Leeds and Bristol) and only 14% looking to the EU – the lowest among all four cities. What Cambridge entrepreneurs need to really go global – like the majority of the attendees across the entire summit series – was to gain a greater understanding of potential markets and to feel more confident about going global.

Cambridge Growth Summit | 10© 2019 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Which area represents the greatest revenue opportunity over the next three years

Middle East

US

9%18%

Africa 9%32% China

14%

EU18%

Asia (excluding China)

Trouva’s Alex Loizou echoed others in Bristol and Leeds in arguing that, to gain that confidence, there is really no shortcut to seeing it for yourself.

“I was the first one that was down on the ground in Berlin. I signed up the first 10 shops. And I'm a software engineer. But it was important. Why? Because by doing that, I got much more of a grasp of what was happening on the ground.”

What would encourage you to begin or accelerate, the internationalisationof your business?

Having access to more Gaining a better government trade adviceunderstanding of your potential

4% Being clearer about the UK’s

30% 22% terms of trade post

13%Having in place the right 31%financing structures

Feeling confident about “going global”


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kpmg.com/uk

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