Cambridge has cemented its place as a crucial hub of the UK’s innovation economy. In the first half of 2025 alone, at least $450M in VC funding was raised by the regions start-ups and scale-ups - that’s second only to London itself¹.

There are a lot of factors driving this well-earned success. A world-class university, proximity to London, a reputation for being one of the best places to start a business in the UK², and a desire to become Europe’s science capital within the decade have seen a surge of startups and scaleups seeking to add to the city’s growing list of unicorns.

The future seems bright, but what does it hold? That was the topic of an active and passionate discussion over breakfast at the offices of Mills and Reeve during Cambridge Tech Week.

Here’s a summary of the core technologies and trends that the assembled founders, investors, lawyers and financiers might factor into the next step in the city’s evolution.

Deep tech, a hold all term applied to novel technology built on scientific discovery or meaningful engineering innovation, is an area that has long been viewed as a bit of a square peg when it comes to fundraising.

Capital and asset intensive, with slow returns, the high-speed, scalable world of software has arguably been the core of the innovation in the UK for decades – but the tide is turning as evolving challenges inspire new technologies and solutions.

Advances in AI are accelerating development in areas like robotics, space tech, and quantum computing bringing commercial viability one step closer.

Here’s a brief, anonymised summary of the discussion on each, led by HSBC Innovation Banking

Robotics: Get ready for embodied AI

AI and deep learning, coupled with advanced robotics, represent the convergence of the newest hardware and software that may trigger a shift away from the existing focus on core industrial applications to more humanoid interactions. Think co-bots and vast improvements in haptics.

Can quantum computing leap into commercial viability?

Quantum computing is at an inflection point and needs early adopters in the market to help drive commercial viability. The task? To prove product market fit and define tangible use cases in core industries like finance, energy, utilities, and government.

The potential impact of inference AI on semiconductor development

Inference AI, the process whereby trained models make predictions and reach a conclusion, is energy heavy and expensive – a problem that makes it unscalable. However, with its myriad use cases, particularly at the edge in embedded sensors and IoT, it could be the tech that triggers a shift in the market by moving compute infrastructure away from central nodes to the edge.

Think of this: once LLMs have consumed all the world’s written data, where will it look to next? AI-driven inference at the devices in the hands of the global population could be the site of the real revolution. But who will lead it? Dominant chip makers building in bulk, or startups creating for specific use cases?

Space: More than just a manufacturing moonshot

Falling launch costs mean that space has become a sandbox for innovators to explore everything from zero gravity drug discovery and organ development to space-based data centres and floating factories. At the moment, though, satellites used for connectivity and earth observation are still attracting the most investment.

Of course, these deep technologies need a receptive market to accelerate from frontier fiction to viable investment opportunity. The second part of the discussion, led by the KPMG team, focused on market conditions.

With its superb spinouts and sophisticated investment ecosystem, Cambridge itself is arguably the best place for deep tech founders to build the kind of capital stack they need.

A shifting market drives the need for an innovative approach to funding

A difficult market is best understand somewhere in the middle of the rose-coloured views and doom and gloom coming from various commentators. Traditional terraced, sequenced fundraising has been replaced by a need to zig and zag your way, planning capital carefully to reach exit.

Fallen angels: Who is filling the fundraising gap?

Seed fundraising remains challenging³, in part due to the closure of several angel networks post pandemic. That’s triggered a rise in bootstrapping and so-called “friends and families” raises – which makes access to capital even more difficult if you’re not well connected.

VC open to sustainable growth

Current conditions mean that VCs are looking to back companies with significant ARR; but there is a tradeoff in terms of growth trajectory. Sustainable scaling at 40%-50% is now acceptable in some instances, but the message is clear – VCs will back existing portfolio companies where there is a clear path to profitability⁴.

Regional funds, CVC and Family Offices have "grown up"

With regional funds around key ecosystems like Cambridge evolving, and Family Offices becoming more institutional, founders do have options when it comes to finding funding – provided they can forge the right relationships. Corporates are also active, but they are known to come in then retreat, so be wary of control rights.

It’s early days, but the founder flywheel is turning

More and more founders are building new ventures rather than just getting their angel wings⁵. These serial innovators bring collective credibility and will, in time, encourage larger tickets as teams are "more backable".

With the brightest minds, cutting edge research, a supportive, sophisticated investment ecosystem and a growing need to develop and deliver deep tech at scale, Cambridge is well placed to continue on its trajectory and become a world-leading hub.