Will the Oxford-Cambridge growth corridor benefit the UK's tech startups?

Written by Tom Montague - Sales Director.

There's no question that the UK could do with a boost to innovation and entrepreneurship.

But one problem is the lack of investment outside London, another the lack of transport links. And as part of a series of regional projects, the government recently announced plans for the Oxford-Cambridge Growth Corridor, with the aim of helping the arc between the two cities attract talent and build the necessary infrastructure. 

"Just 66 miles apart, these cities are home to two of the best universities in the world, two of the most intensive innovation clusters in the world, and the area is a hub for globally renowned science and technology firms in life sciences, manufacturing, and AI," said chancellor Rachel Reeves, announcing the plans.

"To grow, these world-class companies need world-class talent who should be able to get to work quickly and find somewhere to live in the local area."

The new plans, which Reeves said would boost the UK economy by up to £78 billion by 2035, centre around the building of a new rail link between the two cities, along with road upgrades. Water companies are to be given money to improve their infrastructure – a long-standing problem in the Cambridge area – and planning restrictions are to be relaxed.

And central to the project is the creation of a new large-scale innovation hub in the city centre by Cambridge University, along the lines of the LabCentral life sciences incubator in Boston, Massachusetts. Initial plans have envisaged a mixture of lab space for early-stage companies, with access to investors and advice as they work to scale up. Those that make it big could then move to one of the several science parks around the city.

Strong tech heritage

Both Oxford and Cambridge universities have a robust track record of business spinouts, particularly in the life sciences and technology sectors.

Late last year, Oxford University Innovation (OUI), the technology transfer office of the University of Oxford, revealed that between August 2023 and July (202), OUI and its partners raised £19.5 million in seed funding and £872 million in investment for Oxford’s companies. Fifteen new companies – ten spinouts, two social ventures, and three start-ups – were launched.

Deals included the purchase of student-led AI identity verification start-up Onfido by global security company Entrust Corp in April 2024 – the largest-ever student-led company return on investment for the University of Oxford. And also last year, Samsung Electronics acquired Oxford Semantic Technologies, a spinout which specialises in cutting-edge knowledge graph and reasoning technology.

Cambridge, meanwhile, is already home to a cluster of 5,000 knowledge-intensive companies – and, says the government, could form part of 'the UK's Silicon Valley'. Tech companies based in and around the city raised a record-breaking $1.6 billion in the first half of last year, thanks in part to £2 million in investment jointly contributed by the University of Cambridge, through Cambridge Enterprise Ventures, and investment partner Parkwalk Advisors.

However, there are concerns that the Oxford-Cambridge Corridor plans, yet again, involve increasing resources for the south-east rather than more deprived areas of the country.

"While the Oxford-Cambridge Growth Corridor is undoubtedly world-class in research and innovation, ensuring its benefits extend across the wider UK must be a priority," commented Katie Gallagher, MD at Manchester Digital and chair of the UK Tech Cluster Group (UKTCG). 

"We need to see a truly national approach that supports growth in all regions and prevents deepening economic divides."

The regional startup divide

There are certainly big regional differences when it comes to support for entrepreneurs. According to data provided by StartupBlink last year, London was overwhelmingly the top city for startups in 2023, scoring more than ten times as highly as second-placed Cambridge. Manchester and Oxford were close behind.

However, the gap is narrowing for tech startups, according to UKTN. Over the course of 2024, it found the number of AI companies registered outside London rose by 42 per cent – well ahead of the 32 per cent recorded for London. Scotland and the South West saw the fastest growth while, outside London, Birmingham and Manchester saw the highest number of AI companies founded.

It remains to be seen whether the Oxford Cambridge Corridor will do as much for tech startups as the government is indicating; certainly, there appears to be no direct funding for businesses beyond the £20.4 billion investment for UK R&D announced in last October's Autumn Budget.

"The UK's six million small businesses and start-ups will welcome the return of a positive drum beat for 2025, but they will be keen to understand how the chancellor's plans, like the Oxford-Cambridge Growth Corridor talked about today, translate into tangible benefits for local enterprises," said Emma Jones, founder of small business community Enterprise Nation.

And, she warned, "The success of initiatives like this will ultimately depend on whether they create an inclusive economic environment that supports businesses of all sizes."

At Howden, we’re dedicated to supporting tech businesses, and with our office strategically located in the thriving tech hub of Cambridge, we eagerly anticipate the government's plans coming to fruition. 

Contact us today to learn how we can help your tech business thrive in this dynamic environment.