Digital start-ups flocking to Silicon Fen as city centre costs continue to rise

  • 25% increase in digital businesses in South Cambridgeshire (Silicon Fen) since 2013; 18% increase in Cambridge
  • Office costs in Cambridge pushing digital start-ups to locate further afield
  • Peterborough fastest growing digital economy in Cambridgeshire

The digital economy in the greater Cambridge area is reaping the benefit of high costs in the city centre, according to a study by Price Bailey, the Cambridge-based accountants.

Price Bailey analysed data commissioned from National Statistics, which shows that between 2013 and 2017, the number of digital businesses in South Cambridgeshire, the area surrounding the city of Cambridge, known as Silicon Fen, jumped by 25% from 630 to 790. The number of digital businesses in Cambridge itself increased by just 18%, from 560 to 660 enterprises.

Digital industries range from software and app development, machine learning, artificial intelligence and IT consultancy to the manufacture of electronic components, such as computers and semiconductors.

According to Price Bailey, while Cambridge is still a huge draw for multinational technology businesses which seek to cluster as close to the city centre and university buildings as possible, Silicon Fen is increasingly attracting smaller digital enterprises due to its lower cost base.

Andrew Mason, Director in the Cambridge office of Price Bailey, comments: “The reputation of Cambridge as a world-class centre in science and technology acts as a huge draw to large international corporations, which tend to displace start-ups who are unable or unwilling to compete on rents to locations such as South Cambridgeshire or Peterborough.”

“Office costs in Cambridge are significantly higher than other areas in Cambridgeshire and, despite increasing supply, landlords tend to favour letting to larger businesses. This is pushing many smaller start-up businesses to look outside Cambridge to the surrounding region. These digital businesses want to be as close to Cambridge as possible, where they can tap into the talent pool, but without the associated costs.”

He adds: “Digital start-ups are also increasingly looking at virtual office solutions which can provide a cost effective and flexible alternative to help those businesses manage cash burn. The widespread availability of fast broadband means that it is very easy to operate from outside Cambridge while using a virtual office service located in the city.”

Peterborough fastest growing digital economy in Cambridgeshire

The data obtained by Price Bailey reveals that Peterborough has seen the biggest increase in the number of digital businesses in Cambridgeshire since 2013. The number of digital enterprises in Peterborough jumped by 33%, from 330 to 440 between 2013 and 2017.

According to Price Bailey, Peterborough is reaping the benefits of significant investment in its digital infrastructure in recent years, combined with lower costs of doing business compared to Cambridge and Silicon Fen.

Andrew Mason, comments: “Peterborough is the fastest growing locality in Cambridgeshire for digital start-ups and is rapidly establishing itself as a leading regional digital hub. While there has been strong growth in the number of new digital business across the region, with the pressures on infrastructure and costs in the centre of Cambridge, new businesses are looking to Peterborough as an increasingly credible alternative.”

Price Bailey points out that the digital strategy adopted by Peterborough in recent years has created an ultra-fast fibre network connecting business parks in the city. The ultimate ambition is to establish Peterborough as one of the most digitally advanced cities in the world.

He says: “Digital start-ups are able to take advantage of the ultra-fast connectivity which is available in Peterborough, together with the relatively lower costs of doing business enabling those start-ups to focus more time and resources on developing products and services as part of their growth strategy. Employees are also able to benefit from significantly lower housing costs compared with Cambridge and the surrounding area.”

Increase in number of digital businesses in Cambridgeshire, 2013-17