Cambridge Consultants and Esprit Capital Partners announce creation of joint venture fund

(L-R) Ray Edgson of Cambridge Consultants and Simon Cook of Esprit Capital Partners

• The first new venture is expected in 2007
• Previous investments yield IRR in excess of 50%

Cambridge Consultants, a leading technology-based design and development company, announces that it has created a new venture fund of up to £10 million jointly with Esprit Capital Partners. The creation of the fund supports Cambridge Consultants’ move to restart its spin-out activities after a four year gap and will be used to invest exclusively in its own technology ventures. Cambridge Consultants has a track-record of creating and developing successful start-up companies that is second to none, with just four of its spin-outs creating a value in excess of £1 billion in the last 7 years.

According to the British Venture Capital Association survey of 2004, the upper quartile performance of early stage funds between 1999 and 2004 returned a net IRR (internal rate of return) of 9.6%. During the same period Cambridge Consultants’ spin-out investments produced an IRR in excess of 50%. Not surprisingly, this performance led to extremely strong competition to partner with the company in the creation of the new venture fund, one that will see one new start up company created every two years on average.

Esprit Capital Partners, formed by the recent merger of Cazenove Private Equity and Prelude Ventures, won the tender process due to its strength in both investing in, and supporting, early stage technology ventures, as well as its ability to provide funding for later stage growth. The team at Esprit Capital Partners also brings to bear significant experience in investing in technology start ups, including several from Cambridge Consultants. These include Cambridge Silicon Radio (CSR) whose market cap is approximately £1.1 billion, and Alphamosaic, which was sold to Broadcom for $120 million just three years after start-up. The new investment will be made by Prelude Trust plc, the investment trust that specialises in early stage technology-based businesses, now managed by Esprit Capital Partners.

Ray Edgson, Ventures Director at Cambridge Consultants commented, “To make a truly successful venture you need three key ingredients – the right people, the right technologies and the right market conditions. With confidence now restored in the global technology markets, we believe that it is people that make the essential difference between average and truly great new ventures. Our track record of success in this area, and an IRR in excess of 50%, shows that our unique culture allows us to develop just such people.”

Edgson continued, “We are able to recruit some of the best engineers in the world because of the stimulating and creative environment we provide as they develop throughout their careers. However, whilst there is a structured career path within the company, our venturing model allows those who want to exploit their entrepreneurial skills to go on and start their own businesses, whilst being supported by our established networks and systems. It’s an approach that has made us central to the creation of today’s vibrant technology cluster in the Cambridge area, as well as making quite a few millionaires.”

The aim of the new fund is to invest exclusively in Cambridge Consultants’ own new ventures, following the company’s success in this arena. The first new venture is expected to appear in 2007. Candidates for the next batch of ventures are expected to come from a range of Cambridge Consultants’ core markets, including wireless technologies, drug delivery, diagnostics, radar and electronics.

Spin-outs from Cambridge Consultants collectively employ almost 3,000 people, many of whom are headquartered in the Cambridge area. It is this pool of successful technologists in one area that has created what is often referred to as the ‘Cambridge Phenomenon’ or ‘Silicon Fen’.

Simon Cook, CEO of Esprit Capital Partners commented, “Naturally, we are delighted to partner with Cambridge Consultants to create this fund, which reflects our core strategy of working with, and investing in, early stage hi-tech companies with global ambitions. By combining both partners’ venture expertise, our aim is to deliver a clutch of spin-outs over the next few years that will carry on the tradition of generating both employment and wealth-creation for many in the region.”

Notes to Editors

Cambridge Consultants has, for over 45 years, enabled its clients to turn business opportunities into commercial successes, whether launching first-to-market products, entering new markets or expanding existing markets through the introduction of new technologies. We develop breakthrough products, create and license intellectual property, and provide business consultancy in technology critical issues for clients worldwide.

With a team of over 200 engineers, scientists and consultants, in offices in Cambridge (UK) and Boston (USA), we are able to offer solutions across a diverse range of industries including healthcare, industrial and consumer products, automotive, transport, energy and wireless communications.

The company has created over twenty new ventures in the past twenty five years, several of which have gone on to achieve listing on the London Stock Exchange, namely Domino, Xaar, Prelude Trust, CSR and Vivid (sold to Vectura). Other successful spin-offs include Alphamosaic and Inca, who have subsequently been acquired by Broadcom for $123m and Dainippon Screen for Euro 43.8m, respectively. Both sales were achieved within five years of the companies being formed. For more information, visit www.CambridgeConsultants.com


Esprit Capital Partners

Esprit Capital Partners is a leading venture capital investor focused on technology, new media, telecoms, software and life science/healthcare investments. Esprit aims to provide superior returns for investors in its funds by investing in, and helping entrepreneurs to build world class companies.

Esprit Capital Partners was created by the merger of Cazenove Private Equity and Prelude Ventures. Prelude Ventures has been making successful early stage investments in UK and European technology and healthcare businesses for 21 years and manages Prelude Trust PLC. Cazenove Private Equity has been active as a cross stage investor in the European technology market since 2000, making more than 30 investments in this time from it’s limited partnership funds. Both firms have a strong reputation for supporting their investments throughout their life cycle. The combination enables Esprit to support leading entrepreneurs in IT, telecoms, media, life science and healthcare companies across Europe at all stages of their business ambitions.

The Esprit team has helped to build some of Europe’s most successful venture exits of recent years. The $225m sale of KVS to Veritas was voted Exit of the Year at the Investor All Star Awards, 2005. The $123m sale of Alphamosaic to Broadcom was voted Deal of the Year at the EVCA Awards, 2005. In 2004, FillFactory was sold to Cypress Semiconductor for $100m. The $65m sale of DNA Research Innovations to Invitrogen in 2004 was the highest realisation of a European life science company for the previous two years. Cazenove Private Equity was voted Venture Capitalist of the Year at the UK Technology Innovation and Growth Awards, 2005.

Esprit has $500m (£285m) of assets under management focused on European venture capital and a combined team with over 100 years of venture capital experience. Esprit Capital Partners has offices in London and Cambridge, UK.