Calling all purveyors of exotic fish and exotic fish tanks; all purveyors of designer office furniture; all purveyors of fancy cars and all purveyors of highly qualified people. Go North! Go North!
Lord Mandelson, with an eye to the elections next year, has pushed through the expansion of OneNorthEast’s (the regional development agency) plans for a £125m (could be up to £150m) venture capital fund that will be invested by a local fund manager in businesses in the region. The money comes from the EU. According to Richard Tyler writing in the Daily Telegraph “Further ‘super funds’ are planned for the North West and Yorkshire and Humberside”. The total of the funds could exceed £500million. Local VCs will be retained to make the investments and show the southerners how to build companies north of the Wash.
Working on the usual VC take of 2% and 20% (2% management fee and 20% of the winnings), some £10m will be set aside for management fees. Assuming that each company will need new offices, furniture, cars and people let us guess that there will be some 10% of the funds spent available to the purveyors of choice, a juicy £50million or so.
But not all the fees will be spent “up North” as OneNorthEast has retained Robert Drummond from his Surrey and London base. Worthy names are on the board but no one from the Cambridge Cluster. After all, as said in a recent report funded by NESTA, the success of the Cambridge Cluster was “serendipitous”.
Even more surprising is these comments in the article by Richard Tyler on OneNorthEast “The agency expects the fund will seek to invest all the money within five years and reinvest its profits. It estimated that “up to 850 small to medium-sized companies” could receive investment”.
At a recent NESTA event, one of the great movers of the Cambridge Cluster, Herman Hauser said that he and Amadeus Capital tracked 1,000 VC funded companies in the UK. So Drummond proposes to nearly equal that figure within five years. If the other “super funds” invest at a similar rate and scale, the UK is set for an explosion of VC funded companies.
Companies have always flourished in clusters with the Cambridge Cluster being all about technical companies with a connection with the University of Cambridge. Clusters need lots of skilled people and successful entrepreneurs sharing their knowledge and experience – it takes time to build a cluster.
Perhaps we should encourage our two Laurences – John and Garrett (of Amadeus and 3i) to manage a fund(s) north of the Wash to be the purveyors of the skills of our cluster? What riches might flow back to Cambridge? What new names for Cambridge Colleges?