A fresh way to build the future of UK deep tech
Cambridge Future Tech is only just getting started...
We’ve got a different kind of profile for you today.
Cambridge Future Tech is a venture builder behind some of the deep tech startups we’ve covered in the past here at PreSeed Now.
It’s preparing to scale up its operations now, so we figured it was a good time to check in and hear the story behind how this company works - and why.
As usual, our paying subscribers get the full story, with much more on their funding, vision, competition, and challenges.
PS: We’re lining up startups to talk to into the autumn months, so if you know a great B2B or deep tech startup from anywhere in the UK (anywhere from inception to raising seed) that we should profile, drop me a line and let me know.
How Cambridge Future Tech is helping to build the future of UK deep tech
As the current state of the economy leads early-stage investors to look for startups that can turn a profit at an earlier stage, deep tech startups face a challenge.
Raising funding for long-term, high-risk, and high-reward bets from potentially world-changing technology has become even more challenging than it was.
And yet deep tech can be critical to pushing humanity forward at a time when we really need it, creating some hugely valuable companies along the way. Just look at the interest in Arm’s IPO for proof of that.
There are some who seize this opportunity, though. New early-stage deep tech funds have emerged from a number of VC firms recently. Cambridge Future Tech [CFT] is another interesting development in the space.
“It's very difficult for the investment community to meaningfully engage in investment activities in [early-stage deep tech] because of the lack of measurable KPIs on early-stage companies,” says Cambridge Future Tech CEO and co-founder Owen Thompson.
“It’s very specifically acute within deep tech, where there is likely to be less commercial traction, and there's more technology development that needs to be done. And there's the slightly more complex administration of needing to spin companies out [of universities] through the tech transfer office system.”
CFT identifies university research around the UK with promising commercial potential, and works to help spin out a company and run it in a hands-on way alongside the technical co-founders until a business team is in place.
The company is working towards building out eight companies per year, having already taken six companies to the pre-seed investment stage.
Thompson says CFT spends a lot of time speaking with academic communities, research groups, and corporations to find the right opportunities. From a shortlist, they then pick those with the biggest market opportunity and exciting technology.
Some of the startups Cambridge Future Tech has co-founded include companies we’ve profiled here at PreSeed Now, such as Mignon (A.I. chips), GitLife Biotech (GitHub for synthetic biology), Mimicrete (next-gen self-healing concrete), Autopickr (lightweight precision crop-picking robotics), and NeuroXR (customer experience data for immersive worlds).
The business model
CFT has two ways of working with the technical teams whose work underpins each startup.
The first is a self-funded venture-builder approach where CFT ends up with equity in a portfolio of deep tech startups. The second is a service model where the company partners with corporations to help build deep tech ventures for a direct payment while the client takes equity stakes in the resulting startups.
“With the corporates, we're acting as an intermediary for the corporate in the initial negotiation phase, and through building out the governance,” says Thompson.
“When we're working with technical founders who are spinning out from the university, it's more of a supportive mechanism. We probably already know the individuals in the tech transfer office. We understand the process, we've done it several times before and so we can often expedite that process and achieve the optimum terms both for the university and for the founders in that instance.
“Previously, the technical founders or the professors might have seen that process as slightly daunting, or they might not have had the information that they needed to go down the commercialisation route.”
Thompson says that while they have no “cookie-cutter” approach to building out a new deep tech startup, CFT spends between six months and a year taking a company from spin-out to, hopefully, a compelling proposition for pre-seed investors.
While most venture builders primarily take the ‘technical co-founder’ role in their startups, CFT takes on the business side. The academics are the technical specialists and CFT handles work like developing the business side, financial planning, conducting customer research, and coaching founders on creating a product roadmap.
“What we end up with is a data room with so much depth, market research, and data to underpin the initial pre-seed round that we like to aim for a data room akin to the level of depth and accuracy that you would usually get at a Series A round,” says Thompson.
“We want to make sure that investors know what they're going to get when they see a CFT company coming up for its pre-seed round.”
How it started
Thompson hasn’t always been an entrepreneur. He spent 13 years in the RAF as a fighter pilot, where he developed a specialism in electronic warfare. This led him towards tech via a stint at BAE Systems.
Through working in aerospace R&D, he identified the support gap faced by many deep tech teams in universities and decided to do something about it.
So he teamed up with Xavier Parkhouse-Parker, with whom he had been working on a separate brand-licensing startup venture and shared an excitement for deep tech. Third co-founder George Neville-Jones was initially an adviser, but was similarly enthused enough to join the team.
Now as the company grows, Thompson says CFT is well-placed to support startups through the spin-out process and with early investors. This can be a tricky situation for some spinouts; some universities have traditionally looked to take large stakes in spinouts, which can be offputting to external investors and impede future growth.
“We don't charge fees to investors, we don't charge fees to any companies, we don't charge fees to the tech transfer offices. By taking on a small equity stake where we co-found these companies, it keeps our alignment completely where it should be. If those companies don't see success, we won't see success,” says Thompson.
“So it puts us in a really beautiful place when it comes to things like mediating between the university and the VCs, and in the great debate that's going on in the UK at the moment around equity positions. We've got no interest at heart other than that of the founders, and our business mechanism ensures that that's the case.”
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