Wednesday, 18 December 2013

Why entrepreneur-led early collaboration and consolidation makes sense for small biotech...

Try boiling one potato in a whole saucepan full of water - it takes ages, is wasteful and, as economists would say is highly inefficient. There are two solutions. You can tip out most of the water and try to find the perfect amount to boil one potato (try modelling that!) or you can throw in a few more spuds. That is the obvious solution and it is why the single-product small biotech company is an extravagance that will rarely provide a sustainable model, either for investors (who generally recognise this) or for entrepreneurs (many of whom do not)!

For some time the investment climate for UK small biotech has been changeable at best and at worst it has been downright chilly. It is increasingly noticeable that this mixed climate has been reflected in not just on the investor side (i.e. in terms of the nature of investment activity and identity of investors), but also increasingly in the organisation of small biotech start-up companies, and the outlook of the entrepreneurs behind them.

It has been commonly accepted for over a decade that consolidation is required. However, it is time we started seeing consolidation taking place at the earliest stage and being entrepreneur-led rather than corporate or investor-led.

Changing nature of investment activity

By way of context to the pressures on small biotech, here are some key investment trends that have been reported (and I have observed first hand) in recent years:
  • Fundamental challenges with small biotech investment include that:
    • it is capital intensive;
    • short to medium returns are unlikely owing to the timescale of development; and
    • is it inherent risky, and that risk is binary - sooner or later start-ups can be marked as a success or a failure, and there is rarely any middle ground.
  • It is no surprise then that there has been an ongoing retrenchment by venture capitalist activity in biotech - the biotech development model and the VC investment model has for some time been in danger of looking irreconcilable.
  • The exit data corroborates this retrenchment rationale. In 2012, the average period for VC-backed companies to reach an exit was averaging approximately 9 years - this is just not compatible with the VC fund management model.
  • This in turn had led to a growing unease amongst big pharma companies, who look to biotech for their pipeline of future blockbuster drugs (against a looming backdrop of various cash cow blockbusters coming off patent), which in turn has spawned increased levels of corporate venturing and bio-pharma collaboration activity in recent years.
  • In medium to large biotech, the trend of the last decade has been one of consolidation. Biotechnology M&A has served to grow the product portfolios of the most successful companies, for some has been an integral path in the journey to becoming a fully integrated biopharmaceutical company (the so-called "FIBCO") and/or to exploit more mundane synergies of cost and management.

So how does the consolidation trend fit in?

The corporate venturing has been noticeable and welcome. However, a key element of the above snapshot  for small biotech companies is the recognition of fundamental efficiency drivers which can mitigate against their intrinsically capital intensive nature.

Now, as any business school grad will be able to tell you, efficiency is the key tenet of the mainstream theory of the firm. The neo-classical economic analysis of Ronald Coase reaches the conclusion that the reason that people group together into collective economic units is to minimise the transactional costs amongst one another that they would otherwise incur in doing business, and thereby maximise their collective profits. A firm should therefore continue to grow in size as an economic unit until it becomes so bloated that the costs of doing business internally are greater than those prevailing in the wider market. The original Coase analysis has been subjected to sustained challenge since its arrival in the 1960s, including from those who point out that managers will often pursue personal utility instead of maximising profit (including salary, security, power). So while, in its purest form, the theory of the firm mitigates against the small start-up, in fact start-ups can thrive where they operate in a more efficient way than larger rivals (because of market imperfections, brought about by innovation, a disparity of knowledge/ skills, and other competitive advantages, including the super-human abilities of many entrepreneurs to leverage their waking hours!). When you add to this the attention that investors in start-ups pay to aligning their (long-term profit making) objectives with the founders interests, start-ups start to defy Coase's perfect market analysis and revisionist theories of the firm start to ring true.

Despite the fact that the revisionist theory of the firm has been the staple diet of the education of many C-level executives in venture, PE, banking and the corporate development/ M&A world, the imperfect markets in which we operate can defy traditional analysis. Even the most nimble start-up will struggle to defy the bigger is better analysis where barriers to market entry and fixed costs are high.

The overall consolidation trend is in evidence in a number of ways-
  • Popularity of research campuses which can bring great synergies amongst occupants (e.g.  Babraham Research Campus)
  • Apparent Investor appetite for Biotech Exchange traded funds
  • Buy and Build strategies
  • "Stabling" of biotech companies by CVCs
This is not the "consolidation" seen in the early 2000s, when many biotech companies were bought solely to be asset stripped and have their failing development programs shelved. This is genuine constructive consolidation, grounded on a very practical economic basis.

In this context, it is hard to see why the trend to consolidation should not continue. I predict increasing activity amongst buy and build merchants in the small biotech sector over the next few years, not to mention a continuing emphasis on biotech communities rather than biotech clusters.

What form should entrepreneur-led consolidation take?

Many seasoned biotech entrepreneurs have been running various companies in parallel on a portfolio basis for years for this very reason. However, the time is ripe for a more organised approach amongst entrepreneurs - the benefits of a shared base of both cost and human capital plus an ability to benefit from a genuine product portfolio should rightly be overwhelming. More biotech start-ups should be joining forces!

If a research scientist wishes to develop and commercialise a piece of research, instead of starting a single purpose company, wouldn't it make more sense if possible to join forces in a single economic unit with people developing similar but distinct technology from day 1? Thus, when it has become clear after some development that any given idea is a non-runner, all efforts could be focused on the most promising avenue(s), and the spoils shared.

If I were a biotech entrepreneur, I would be looking around for any available opportunity to join forces with others in the same position as me from the earliest stage. This is not so much a cost case, but is about the benefits - it is about increasing the chances of getting a reasonable reward for the personal financial, emotional and time investment involved with a start-up. The loss or sharing of control would not be a problem for me - if the company takes off, there is a good chance that an external management team would need to be hired in any case.

It is therefore not just investors that should be driving portfolio theory, but also entrepreneurs who are pragmatic enough to realise that boiling just one potato is unlikely to make sense for them...


Sunday, 15 September 2013

Venture capital in Scotland - here's my take...

I had a very enjoyable trip to Edinburgh last week to take part in the “Building an Entrepreneurial Company” programme of Entrepreneurship Masterclasses, delivered in a partnership between Scottish Enterprise and Highlands and Island Enterprise (HIE). Edinburgh is a fantastic city and it takes no time to get into the centre of town from the Airport (potentially even less imminently as the much awaited and somewhat beset tramline is due to be completed next summer).

On various occasions, I have acted for Scottish companies on their funding rounds. I have also acted on several M&A deals involving Scottish companies. I guess I had always seen the Scottish scene as a fully integrated part of the overall UK venture capital market. However, I had not fully appreciated some of the Scotland-specific challenges and opportunities and my visit left me chewing on the distinct character of the venture funding ecosystem in Scotland.

What is so distinct about it, I hear you ask. Here are some of the takeaways I drew from the most recent report on the Risk Capital Market in Scotland, as prepared for Scottish Enterprise by the Young Finance Company:

- Investment levels in Scotland are resilient. By comparison to the London-centric venture capital market, risk capital investments in Scotland held up pretty well during recent years of economic uncertainty, especially in the deal band size of £100k - £2m. Whereas many of us experienced deal flow in England dropping off a cliff in 2009, activity in Scotland proved to be more resilient, and indeed 2010 was a record year for risk capital investment in Scotland;

- Institutional VC/ growth capital investment activity is curtailed north of the border. The available evidence suggests that Scottish companies find it harder to secure large investments from VC houses. VC houses investing in Scotland tend not to do so on a regular basis - there are not too many formalised links between Scottish companies/ angel investors and VC/growth capital investors (which tend to be London-based);

- Scottish angels are a force to be reckoned with. Scottish angel investment activity is in rude health. The angel market has matured nicely and is benefiting from the SEIS and EIS reforms;

 - Scottish Universities deliver spin-outs. Scottish Universities remain excellent from a research perspective, but also create proportionally more spin-outs than universities in other parts of the UK;

- Intervention is coherent and responsive. Government intervention in the risk capital market seems to be to be well thought out, proactive and ambitious in a good way. The agencies, such as Scottish Enterprise and HIE, are nimble and constantly looking to develop opportunities for Scottish companies. Speaking with their delegates in Edinburgh, I was struck by their passion for the companies and entrepreneurs they work with - they look after the interests of their clients as if they were their own and are genuinely striving to "walk in their shoes". This impression was supported by what I have since read about the approach of these agencies, which seems to be marked by responsiveness to trends and a determination to remain "fit for purpose". No doubt this culture of iteration is one of the reasons why the Scottish Co-investment fund remains a torchbearer internationally and many other countries have set up their own similar institutions seeking to replicate the "Scottish model";

- There is genuine sector strength in life sciences and renewables. Scottish venture funding is squarely focused in particular on life sciences and renewables. While there are pockets of excellence in digital media (such as the Dundee computer gaming hub which was catapulted to global prominence with the success of Grand Theft Auto) and the Oil and Gas industry around Aberdeen has spawned opportunities, it is really those two industry sectors that characterise the asset class in Scotland; and

- Exit data is underwhelming though. The exit climate for Scottish companies has been challenging: in 2011 the average age of an investment at exit was 10 years.

What might this mean in practical terms then? Here's my take on this:

- Things are different in Scotland. The Scottish market is segmented from rest of UK. In my view it has become a quite distinct market. Since my visit to Edinburgh, I traded some perpsectives with some VC clients who had made some investments in Scottish companies. Their view was that the distance to Scotland was not a barrier in their investment appraisal process, although as it happened their Scottish investments had produced underwhelming returns and for that reason there was a barely stifled groan when the geography was mentioned!;

- VCs should ensure they have good links with the Scottish market to ensure they are not missing out. Researchers suggest from their discussions with Scottish investors that "the chances that good businesses are being rejected are slim" but I am not so sure - indeed the recent efforts by the public agencies to propogate links to non-Scottish sources of finance suggest that the profile of Scottish investment opportunities needs raising in the wider market. It is a real boon to the Scottish market that the Business Growth Fund HQ is in Edinburgh and I suspect that they will be at the forefront of a reawakening of institutional risk investment in Scotland. In particular, it seems to me that better links between Scottish angels and English-based VCs would create considerable mutual benefits (not to mention transatlantic links, building on the fantastic links and shared heritage between Scotland and the US - if there is not already a showcase of Scottish technology and investment opportunities at the Open golf championships, this would seem to me to be quite a low-hanging fruit to pick);

- The distinct sector focus is both a strength and a challenge. The sector focus on both life sciences and renewables means that opportunities in Scotland tend to be at the capital intensive end of the venture investment spectrum, while the UK-wide trend has been to move towards less capital intensive opportunities amidst disappointing venture returns in recent years. This tentative conclusion is supported by the exit data - VCs want a 3-5 year timeframe to exit. An average 10 year investment age will draw a shudder from many institutional investors but should not be surprising given the nature of the sector focus. Also, given this really clear sector focus, it would make sense for the Scots to follow the lead of London's "Tech City" and consider whether some geographical branding could help raise the profile of one or more clusters of excellence (watch this space for Edinburgh as Cell City!!); and

- Crowdfunding may be big in Scotland. Alternative funding mechanisms (which are geographically agnostic e.g. crowdfunding) can work well for Scottish companies. Is it a function of the distinctive Scottish funding market, I wonder, that Edinburgh craft brewery Brewdog recently spurned VCs et al to raise £3m in a crowdfunding offer in the space of just two months?

All told then my visit was a real eye opener. I am very keen to maintain links with my new contacts, and I will be keeping an eye out for opportunities to help others to understand a bit more about the risk capital investment scene noth of the border.

Thursday, 15 August 2013

Alumni-focused venturing in UK institutions

I'm seeing increasing levels of alumni involvement with University venture activity and expect this trend to continue. Here's my take on this...

In recent years, UK universities have been working hard to develop their alumni networks with a view to raising their endowments. They have had to do so in order to mitigate the very real risk of losing ground to competitors in the United States and elsewhere amid a gulf in funding levels. At the same time, they have also had to develop their corporate relations, and this in turn has brought about improved and more systematic links between universities and industry.

One very positive by-product of this backdrop of reform is increased levels of more formalised involvement of alumni in University venture activity. The great benefit of this type of activity is that it allows multiple objectives to be achieved in terms of broader alumni and corporate engagement.

The outstanding example in Cambridge is the University of Cambridge Enterprise fund, which was launched in May 2012 to allow alumni and friends of the University to invest in new companies while benefitting from the attractive SEIS and EIS tax reliefs. In doing so, Cambridge was the first university to launch its own SEIS fund, and the first to combine the SEIS with the more established EIS. The fund is managed by London-based investment firm Parkwalk Advisors, and invests in new companies supported by Cambridge Enterprise.

 Another example of alumni venturing in Cambridge comes from the Cambridge 800th Anniversary Campaign. The University of Cambridge Discovery Fund, launched in 2008, is an evergreen fund making proof of concept, pre-licence, pre-seed and seed investments, enabling young companies based on Cambridge research to succeed. This fund was launched as a means for philanthropic support, from corporations and individuals, for the very early high risk stages of new company formation. It is essentially benevolent seed money which in the past would have come from central funds.

In Cambridge, the Judge Business School is on trend, having established “Accelerate Cambridge” as a start-up accelerator in May 2012, as a valuable new part of the ecosystem of support for entrepreneurs in Cambridge. With less of an emphasis on funding, the program draws on the JBS network to focus on venture creation by teams with a structured combination of coaching and mentoring.

Oxford too provides some great examples, including The Saïd Business School Venture Fund. This is a student-led organisation which provides investments to Oxford-related companies. The Saïd Fund was started in 2006 with donations from Sir Phillip Green and David Bonderman. The Fund is currently in the process of expansion with a view to making investments in excess of £1million. Saïd Fund investments are made in the same manner as made by institutional investors, and also invests alongside venture capital and impact investment funds in club deals and syndicates. Student members of the committee are responsible for all parts of the investment process and work collaboratively on investment decisions and portfolio management. By working with investment professionals, student members of the committee have a unique opportunity to interact with leaders in their fields and refine their investment knowledge and acumen. What a great way to leverage MBA talent and networks at every level and bring through the next generation of leaders in venture capital.

 A similar model to the Saïd Fund has been set up by Cass Business School. The Cass Entrepreneurship Fund is a £10 million venture capital fund, providing growth equity to start-up and early stage companies. The Cass Entrepreneurship Fund finances a number of high-growth young businesses across the Cass Business School community, as well as providing general support and incubation facilities. The Fund was established in 2010 with the support of Peter Cullum CBE, one of Cass' most successful entrepreneurs and the Founder of Towergate Insurance. In contrast to the Saïd Fund, it is not student-run as such but it does look to leverage the Cass talent network similarly.

In the same vein, Sussex Place Ventures invests in earlier stage technology businesses using the London Business School alumni network. Sussex Place Ventures draws on the knowledge, expertise and experience it sees in the London Business School alumni network to help find, validate and invest in technology businesses looking to grow. Its stated goal is straightforward: to create business wealth for entrepreneurs, superior risk-adjusted returns for investors and benefits for the London Business School, which shares in the fruits of the investors’ success.

There are other various other great examples of alumni-focused venturing across the UK in addition to those set out above, like the University of Herts enterprise fund and the seed investment clubs which are being fostered within the alumni communities of forward thinking Oxbridge colleges (e.g. Downing Enterprise).

In this way, university investment activity in the UK, in many cases led by the business schools, has increasingly adopted an approach that goes beyond pure tech transfer and commercialisation of research. It is a means for institutions to engage with their alumni and provide them with investment opportunities/ sources of funding at the same time.

This approach is not without challenges, including that these venture funds increasingly find themselves competing with angel and institutional investors whose outlooks have been buoyed by the SEIS and EIS tax reliefs. However, to put the trend in international context, in 2012, the Shanghai-based China Europe International Business School (CEIBS) launched CEIBS-CHENGWEI Venture Capital, a venture capital fund of US$100 million which will only invest in early or growth stage businesses founded or managed by CEIBS alumni. In the face of this kind of heavy hitting approach elsewhere, we will surely see more from this relatively new investor class in future.

This is a highly positive development, given the retrenchment in the mainstream institutional VC sector in recent years, and the need for Universities to find new ways to extract value from their networks. I hope to see the trend develop.

In the Taylor Vinters team, we work on a diverse range of venture capital, early stage investment, technology transfer and University spin-out transactions. We worked on 25% of all University spin-outs reported in the most recent PraxisUnico Spinouts UK survey. In doing so, we encounter the various different spin-out approaches adopted by the institutions who are most frequently carrying out venture activity.

A version of this post was first published by me in Business Weekly - on 15th August 2013.

Thursday, 8 August 2013

Luis Suarez, Liverpool and the dangers of soft obligations in contracts

It was reported today in the Daily Telegraph that Liverpool striker Luis Suarez has been ordered to train alone for several weeks after being accused by manager Brendan Rogers of showing "a total lack of respect" to his club with his public demand to join Arsenal.

Clearly, this represents a breakdown in relationships. It is also the culmination of the saga of Suarez's posturing for a transfer. It's an unfortunate situation for the club and the player.

While football transfers can be the type of deals that really put the ego in negotiations at the best of times, the situation seems to have been fuelled in part by the wording of the Suarez contract, an excerpt of which was quoted by Gordon Taylor, the PFA chief executive who is seeking to mediate between the player and the club on this matter, reported as follows:

"There is a clause in there that if Liverpool do not qualify for the Champions League and then they do receive a minimum offer of £40 million, then the parties will 'agree in good faith to discuss and negotiate in good faith' and see what transpires".

When the contract was originally negotiated, this provision will no doubt have seemed like a good alternative to a difficult discussion. In effect though, it counts for little and had the effect of kicking the issue of the circumstances in which the player can talk to other clubs into the long grass. The trouble is that now, with the parties up to their knees in the long grass, they seem to be finding that as any 12 year old on the rec would tell you, this is not a good place to be...

I am often asked to include these type of soft obligations (to consult, or negotiate, or hold future discussions, or use reasonable endeavours to do something) in contracts. Usually I would counsel strongly against them. Aside from the fact that they are often used as a means of avoiding difficult discussions up front, they can give rise to significant problems of interpretation where the wording used is not specific enough to be meaningful.

In this example, there are some obvious problems, including:
  • Under English law, it is a longstanding principle that so-called "agreements to agree" are generally unenforceable. So saying an obligation is subject to future agreement can effectively make that obligation meaningless;
  • There is no certain meaning to "good faith" in these circumstances. The only way to get certainty on this in the absence of agreement would be to go to court and have the judge decide how this obligation should be interpreted; and
  • Having an obligation to "discuss and negotiate" again brings an unclear meaning. This could be a very short discussion and negotiation indeed, and explains why Liverpool seem to have given short shrift to offers below their own valuation.
This is a classic example of where it would have been better for all concerned to have thrashed out a more certain position, and a more specific mechanic as to what should happen in the event of a >£40m offer, at the time of signing. The media wrangling and bad blood that has been evident in recent weeks could and, with the benefit of hindsight, should have been avoided with a more transparent and specific approach to papering the player's terms. All too often, negotiations focus on the contract deliverables - an orderly approach to what happens if the deal does not work out should never be sidelined in the excitement of signing a trophy contract.

Wednesday, 31 July 2013

Should we have a concept of "abuse of a minority shareholder position" in English law?

The essence of the venture capital model is taking minority stakes in what are hoped to be fast growth companies. This means that us lawyers spend a lot of time on making sure that minority protections are appropriate, both to the venture investor and the target company. However, we do intermittently encounter scenarios where minority investors wield a high level of indirect power over key events in the life cycle of the target company, either actively by objecting or tacitly by totally disengaging from company matters... and increasingly I am not sure that is right as a matter of policy.

To illustrate this, I have set out three general scenarios where a minority can threaten a sting in the tail.

Exit reluctance.

Confronted with an exit opportunity, on the face of it, any shareholder could turn around and announce "I'm not selling". The Companies Act 2006 does provide a solution to this, in the form of a statutory "squeeze out" procedure set out in Part 28 of that act. However, this involves a prescriptive timeline and process, not to mention a 90% acceptance threshold. It may not therefore be a practical option in the context of many transactions. In many private company deals, advisors tend to see this as a last resort. The preference instead is to be able to point to a well drafted drag-along procedure in the target company's articles. Even drag-alongs come with a note of caution though. Many of them are just not very well drafted. If I had to single out the two areas of a typical set of articles which require closest attention, these would be the waterfall (who gets what on liquidation or exit) and the drag-along. In that context, the elation of winning a sale mandate has been tempered more often than I would like it to have been by discovering that the drag along which comes with it falls in a grey area of enforceability. There is a trickle of case law that highlights some drag-related pitfalls, including the much cited 1900 case of Allen v Gold Reefs of West Africa Limited. The judgement in that case states that that where changes to a set of articles include any compulsory transfer provisions, shareholders must exercise their voting power in good faith and in the best interests of the company, rather than merely in their own best interests. This is why it is always best to incorporate a detailed drag at the earliest possible stage in a company's life, and preferably with a 100% shareholder vote (although even that is not always enough (see Constable v Executive Connections Limited if you're interested)).

Class rights.

The default position under the Companies Act 2006 is that a variation of rights attaching to shares of any given class basically requires written consent from the holders of at least three-quarters in nominal value of the shares of that class in issue. This can be disapplied in a company's articles and it is usually advisable to do so, even if it is replaced with some other consent mechanic. Again, the class consent regime comes with a note of caution - there is no statutory guidance on what constitutes a "class" of shares. This can leave you with issues where shareholders can construct an argument that they have class rights which go beyond the designations of share classes (As, Bs, Ords etc) set out in the articles. Added to the fact that shareholders holding >15% of the shares of any given class have a statutory right to object to any variation of those class, you can see the potential for minority shareholders to wield unintended power through their class rights. 

Unfair prejudice and other minority claims.

Another potential source of minority leverage is to claim "unfair prejudice". This is the statutory remedy for a (normally minority) member who considers that the company's affairs were being conducted in an unfairly prejudicial manner. It's actually quite a difficult claim for a minority shareholder to take all the way. This doesn't stop people threatening it on a pretty regular basis - while in many cases, this comes from the misconception that a grievance of having been treated "unfairly" gives rise to this cause of action, the other problem is that it can be as difficult to conclusively rebuke these claims as to prove them. Bear in mind that the most likely remedy for such a claim is the somewhat neutral answer of a court ordering that the prejudiced shareholder should be bought out for fair value.

In addition to the specific examples set out above, there is a smorgasbord of other traps for the unwary in terms of statutory procedure and entitlements, and rights in shareholder agreements (with a classic problematic example being shareholder agreements which can only be varied or terminated with 100% shareholder approval).

So what?

Fair enough, you may say, minorities are shareholders too and entitled to the protection afforded to them by law. However, some minorities get more than protection: they get a licence to unreasonably block matters or cause cost/ delay to their company. Tail wags dog!

There are of course things that can be done to mitigate this risk of minority stranglehold including having decent bespoke shareholder agreements and articles, working hard on good shareholder relations and seeking to take disgruntled shareholders off the cap table, whether by compulsory transfer mechanism for employee leavers or by encouraging incoming investors on later rounds to make a secondary acquisition of some or all minority shareholdings (wishful thinking this last one!). However, where I am going with this is that I would like to see a change to the law, drawing inspiration from other juridications (e.g. France) where there is a prohibition on abuse of a minority position.

Specifically, I would like to see an evolution of English company law to provide for:

- a general duty on shareholders who are blocking the will of the majority to demonstrate that in doing so they have struck an appropriate balance between their individual interests and the interests of the company and its shareholder base as a whole;
- a rebuttable presumption that any uncertainty on construction of provisions in company documentation should be resolved in favour of the majority position; and
- consent of shareholders to any procedural matters (e.g. consents/ resolutions) to be deemed given in the case of silence within the period for response.

For smaller companies in particular, this would be a great help in avoiding shareholder deadlock situations and the associated cocktail of cost and ill-feeling. Compared to some of my other ideas for reform (what would I give to have a more straightforward tax code in the UK!) it's not exactly earth shattering, but it would be a helpful step in the right direction.

Sunday, 14 July 2013

Look East Cambridge!

Most of my clients are based in or around London or Cambridge. However, on various occasions recently, I have had cause to visit Adastral Park at Martlesham Heath near Ipswich.

Adastral Park is BT’s Global Research and Development Headquarters. As well as BT, there are many other global telecoms players with a presence there, including Cisco, Huawei, Fujitsu and O2. Most recently, BT and Intel have launched a joint research laboratory to develop networking technologies and smart city capabilities. Pretty cool stuff.

Here is the thing though. There do not seem to be great links between this serious ICT cluster, and the "Silicon Fen" we have in Cambridge. For the life of me, I don't see why this is.

Much attention in the investment community has recently been focused on the question of how Cambridge relates to Tech City, with this question cropping up at various networking events I have attended recently in Cambridge (the consensus seems to be, by the way, that the two areas are totally different, with the more capital intensive "hard tech" in Cambridge being the chalk to the cheese provided by the vibrant web-based start-up community that predominates in Shoreditch and Clerkenwell).

By contrast, there is a recurring theme amongst policymakers whereby Cambridge and Peterborough are bundled in "Greater Cambridge - Greater Peterborough" branding. While Peterborough has some great companies, and has a notable service sector pedigree, the synnergies with Cambridge are not always obvious.

I would love to see Cambridge and Adastral Park cultivate closer links. In the longer term, I cannot help wonder whether the A14 could provide an ICT corrider to keep the Thames Valley on its toes. The most obvious issues with this line of thinking would be with infrastructure, with the single track railway line which runs parallel to the A14 providing a notoriously patchy service, only matched by the patchiness of broadband speeds heading East out of Cambridge. However, Bury St Edmunds (pretty much equidistant between the two) was the home of the world's first internet bench (!), and many Cambridge techies live in that direction. I am convinced that with more distinct links between Cambridge and Adastral Park, there could be great benefits for both. From attending a short presentation on the objectives of, and challenges facing, the team at the BT/Intel co-lab, it seemed to me that Cambridge talent could and should be tapped into on the project through partnering and collaboration. A much more natural interplay in many ways, than the Cambridge/ Tech City axis, I thought.

As UK plc looks to grow out of chastened economic times, this sort of opportunity to encourage collaboration between two genuinely world class centres of excellence, which are little more than an hour's drive apart, should not be missed.

It's not just the infrastructure issues - with literally one or two exceptions, I have never seen anyone from the Adastral Park community beating its drum in Cambridge, nor vice versa. There should be more obvious linkage, and more cultivation of collaboration from both communities.