Oxford and Cambridge technology firms expect continued growth in 2009, says survey

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A survey of 500 technology firms based in Oxford and Cambridge shows a sector that expects continued growth in 2009, but concerns over funding and the availability of good quality people are never far from the surface.

The survey, titled the ‘The Oxford and Cambridge Technology Race’, was conducted by Oxford and Thames Valley accountants James Cowper LLP, and Cambridge and Eastern region accountants Peter Elworthy & Moore during the final quarter of 2008.

Chris Walklett, partner at Peters Elworthy & Moore, said: “The survey was designed to build a comprehensive picture of the technology sector in Oxford and Cambridge and its prospects for the coming year.

“Business owners and chief executives of 500 companies were asked how they felt the resources offered by Oxford and Cambridge translated into commercial success, concerns over the current economic climate, access to funding and staff and on the importance of the government’s R&D Tax Credit regime.”

Sue Staunton, partner and head of the technology group at James Cowper, adds: “The results were in many respects quite surprising with the outlook of companies based in Oxford and Cambridge being very similar.

“Over 60 per cent of firms are very positive about the future predicting continued growth for 2009. However, our survey does highlight, somewhat surprisingly, concerns over the availability of good quality commercial people to help drive businesses forward. The very reason for businesses choosing Oxford and Cambridge – the abundance of technical and academic expertise – seems to cause problems when looking for commercially minded business people.”

The survey also revealed that, despite the government’s £20 billion commitment to help SMEs, the R&D Tax Credit programme continues to play a critical funding role for technology companies. One survey respondent reports ‘It is an excellent scheme for getting cash into a loss-making business – much faster than the endless funding round presentations’, with another respondent citing their recent tax credit receipt of £8million as evidence of the system’s success.

“Our survey suggests that companies are increasingly looking to R&D tax credits as a funding mechanism,” says Sue Staunton. “Over 75 per cent of firms surveyed use the R&D tax credits, but the regime does not escape criticism. Some 20 per cent of respondents find the regime inaccessible, time consuming and uncertain that they would actually qualify.”

The Oxford and Cambridge Technology Race - key findings

Companies in Oxford and Cambridge operate on the international stage, with approximately 75 per cent of sales outside of the UK. Europe and the USA are the most important overseas markets, accounting for approximately 40 per cent of total sales.
61 per cent of companies in both Oxford and Cambridge expect to see continued growth in 2009. 10 per cent of companies in Oxford and 28 per cent of companies in Cambridge expect growth to remain static.
As the country heads for a recession 88 per cent of companies in Oxford and 71 per cent of companies in Cambridge cite the ability to raise funds as of most concern.
Almost three quarters of companies state that being located in Oxford or Cambridge gives them a competitive edge over companies located in other parts of the UK. Access to first rate technical and academic expertise is cited as being of most use.
Respondents state the strength of the sector networks in Oxford and Cambridge (eg, Oxfordshire Bioscience Network and the Cambridge Enterprise Venture Partners), the strength of professional advisers such as accountants and lawyers, and experienced Board members as being of tremendous value.
A significant percentage of respondents said that they find it difficult to hire good quality staff, emphasising the difference between technical staff and, for example, top class sales and marketing professionals.
Funding for businesses in Oxford and Cambridge is split more or less evenly between venture capital funding, private investors/business angel funding, and bank funding. Funding from the universities and from government grants remains on the fringes, accounting for approximately 10 per cent.
78 per cent of respondents cite the government’s R&D Tax Credit regime as being a successful initiative and a valued source of funds.

Copies of ‘The Oxford and Cambridge Technology Race’ survey conducted by James Cowper and Peters Elworthy & Moore technology survey are available from Melissa Baxter, James Cowper on 0118 959 0261 or Pippa Corbettt, Peters Elworthy & Moore, on 01223 728288.

04.02.2009