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Cambridge's tiger economy

• Rory Cellan-Jones
• 17 Sep 08, 15:15 GMT

In a Cambridge college today, a clutch of hopeful high-tech start-ups are entering the Dragons' Den. Or rather they're telling a bunch of venture capitalists and business angels why they will become the Tigers of Tomorrow.

It's a mark of how much British attitudes to entrepreneurship have changed that we now use such colourful metaphors to describe the mundane and painful task of growing a business from bright idea to blockbuster. But at the Cambridge Enterprise conference at Churchill College - with the title "Tigers of Tomorrow" - there are plenty of kittens hoping to grow into big beasts.

A decade ago, to compare Cambridge with Silicon Valley would have been laughable but now there is a real sense that this is the best place, at least in Europe, to start a technology company.

What's it got that makes it work?

Well it has long had a world-class university, with Nobel prize-winning science emerging from its labs, but until recently that produced little in the way of commercial spin-offs.

I came here in the early 90s to make a programme about the so-called "Cambridge Phenomenon" and struggled to find it. But in the late 90s a clutch of big businesses did emerge - the chip designer ARM and the search firm Autonomy to name but two - and the virtuous circle that you get in places like Silicon Valley began to operate.

The people who made money here in that late 20th Century tech boom started to look for new opportunities, some starting new ventures, others becoming business angels. Venture capital firms, mostly based in London, started making regular trips to Cambridge to scope out the start-up scene.

But the key thing is confidence. I spent time with three companies here yesterday, and all seemed to have two things in common - bags of self-belief and a genuine technological edge.

Sure Flap, started by a Cambridge physicist Dr Nick Hill, sounds like a bit of a joke product - a cat flap which opens on recognising the chip implanted in your pet. But Dr Hill says he's done ground-breaking work in developing RFID technology which could be applied in all sorts of areas.

Short Fuze, based in a Cambridge loft, has spent the last three years developing its Movie Storm software, which allows users to make their own animated films. It appears to be a long way from making a profit - or even substantial revenues - but has raised a good dollop of cash and is relentlessly cheerful. "It would be easier in California," admitted the founder Matt Kelland, "but Cambridge is still a great place to start a company."

But most audacious and optimistic of all was a company called True Knowledge, which aims to bring the world another search engine. Taking on the mighty Google with a dozen people in a small office at a Cambridge incubator might seem almost suicidal.

But True Knowledge is confident that its technology, which it describes it as an "answer" engine, gives it an edge by delivering more intelligent answers than conventional search.

They demonstrated this to me by typing in to their box the question "who was US president when Barack Obama was a teenager?" and True Knowledge delivered relevant results, unlike Google which simply supplied a lot of pages featuring the words "Obama" and "teenager".

They've certainly convinced investors, winning another £2m in backing just a couple of months back, in what the firm described as one of Europe's biggest "pre-revenue" fund-raising rounds.

Now for all of these firms the move from "pre-revenue" to profit is going to be a challenge. With the credit crunch making venture capital firms cautious and government grants being trimmed, mere survival could be a struggle. But I have a hunch that the Cambridge habitat will be a happy hunting ground for more technology tigers in the years to come.