FT

When Cambridge’s life science and technology luminaries gathered for an event at Trinity Hall college on Monday evening, guests only wanted to talk about two things: Brexit and Arm Holdings.

Cambridge’s “Silicon Fen” has housed one of the UK’s most successful technology clusters for more than 40 years. But the £24bn sale of Arm to Japan’s SoftBank, marks the last — and the largest — of the city’s big four technology companies to move into foreign ownership. It highlights an issue that has concerned followers of British tech for a number of years.

“We’ve become great starters, but we’re not finishers,” says Tony Raven, chief executive of Cambridge Enterprise, Cambridge university’s technology transfer arm.

Despite a thriving start-up scene, the UK has struggled to translate this into multibillion pound companies to rival those in Silicon Valley. Arm’s sale will leave accounting software group Sage as the only technology company in the FTSE 100.

Dr Raven says the UK is making progress and believes the Arm deal will have a positive impact on the sector.

The British government welcomed the deal — and SoftBank’s pledges to invest in and expand the business — as a vote of confidence in Britain’s tech industry.

But Dr Raven says the sale is “symptomatic that at the moment in the UK we’re not able to take these companies on in the way that Apple and Google and everyone else has on the west coast [of the US]”.

Arm’s sale follows similar takeovers of Cambridge neighbours Domino, CSR and Autonomy. Aveva, the FTSE 250 provider of engineering software, is the sole remaining Cambridge-based public tech company valued at more than £1bn — and one of only four left in the UK. And that is only because a reverse takeover by French industrial group Schneider Electric fell through last December.

Elizabeth Garnsey, a technology expert at Cambridge university, says there are worries about a lack of candidates to become the next leading British tech companies.

“The pattern in general is quite worrying,” she says, with the most promising firms the most likely to be acquired at an early stage.

Last month Magic Pony, the British machine learning start-up was taken over by Twitter for $150m. That followed Microsoft’s $250m deal for Swiftkey last year and Google’s $400m purchase of Deepmind in 2014.

British companies’ willingness to sell out early is not a new issue. Ray Anderson, who worked with Arm’s predecessor Acorn, says Arm’s founder, Hermann Hauser, used to struggle to encourage people to keep going with technology companies because of what he called the “Porsche and two secretaries” mindset — “if you could build a company to the stage where you could afford a nice car and two secretaries, that meant you’d made it.”

I don’t think it’s a problem. Acquisition is not a dirty word. The £24bn cash going to investors is going to be cash they now have that can be put in the next wave of companies

Gonçalo de Vasconcelos

Mr Hauser said on Monday that the Arm sale was one of the “sad and unintended consequences” of Brexit, and a sign “Britain is becoming a smaller and smaller player in the tech sector.”

Start-ups in Cambridge, however, say the deal provides motivation. Gonçalo de Vasconcelos, chief executive of equity crowdfunding platform SyndicateRoom, says: “I don’t think it’s a problem. Acquisition is not a dirty word.”

“The £24bn cash going to investors is going to be cash they now have that can be put in the next wave of companies.”

Mr Anderson, chief executive of Bango, the Aim-listed mobile payments group, agrees. “A lot of ex-Arm employees will have money and time on their hands to do more, and success stories breed confidence in the market.”

“It’s not sad at all, but it’s not a vote of confidence from Asian investors in Britain either,” Mr Anderson says. “It’s a vote of confidence in some amazing technology that’s coming out of Cambridge, and it just happens that Cambridge is in the UK.”