Oxford scale-ups want to upgrade the world

With a history stretching back to 1096, Oxford University is the oldest in the English-speaking world. Over the past nine-and-a-bit centuries, it has continuously puzzled out humanity’s biggest questions.

It’s where Robert Boyle developed foundational principles of science, where Newtonian physics took root in astronomy, and where the age of antibiotics began. In more recent decades, Oxford researchers brought the world lithium-ion batteries, transformational advances in meteorology, and the secrets of the immune system. Now, that spirit of discovery is being channelled into a scale-up scene with equally grand ambitions.

Enterprise hubs can be broad churches. For all the companies that want to change the world, plenty simply want to provide their customers with a great product and make decent money in the process—and there’s nothing wrong with that. But Oxford is different. It is home to a preponderance of entrepreneurs that want to crack humanity’s biggest problems. “Generally, we’re talking about businesses that potentially want to have a global impact,” says Roger Mould, HSBC UK’s Oxfordshire-focused Relationship Director for Corporate Banking. “In my view, this is all part of a big sea change for the area’s ecosystem that came about in 2015, and it was a real inflection point.”

The sea change in question was the launch of Oxford Science Innovation, now called Oxford Science Enterprises (OSE). This University-partnered investment company was set up with a bold ambition: To “solve our greatest challenges at unprecedented speed”. And it put its money where its mouth was. Over the past eight years, it has raised more than £850m, and invested more than £500m in over 40 companies. “That funding is larger than anything else that I'm aware of—in Cambridge, in London—that is directly connected to a university. It has really kickstarted the volume of start-ups coming out of Oxford,” says Mould. “OSE does not have the same constraints a typical VC fund has, whose investors often seek to exit their investment within three to five years. OSE’s funding is considered to be more ‘patient capital’, and can be invested longer term, with the ability to follow up with further funding rounds, rather than just provide seed capital.”

One company that has benefitted from OSE investment is Oxford Quantum Circuits. The business builds quantum computers, which are an emerging class of problem-solving machines. Unlike classical computers, which process code in binary 1s and 0s, quantum computers use “qubits”, which can occupy both 1 and 0 states at the same time. This allows their performance to far outstrip even the largest supercomputers. The technology has not yet matured—commercial, “fault-tolerant” quantum computers are a work-in-progress—but the ultimate applications will likely be far-reaching, spurring advances in multiple domains from slowing climate change to improving food security. “But the side of this that I'm really passionate about is molecular simulation,” says Ilana Wisby, CEO of Oxford Quantum Circuits. “Every atom is quantum mechanical at its core. That means we can use quantum computers to truly understand the world around us with simulations that we can’t do today. And that will have applications in new batteries, new fertiliser solutions, and new drugs.”

The business counts OSE as an investor because its technology is based on a patent developed by Dr Peter Leek at Oxford University’s physics department. Wisby says that the fact the Oxford ecosystem is so driven by University research, means it has an intrinsic competitive advantage. “Science is innovation in its purest form,” she says. “To have something that is proprietary and truly defensible from the outset is very, very valuable.”

Naturally, companies based in Oxford also have access to the kind of top-tier talent required to solve the as-yet-unsolved. “Oxford is an incredibly cosmopolitan, international city,” says Andrew Hopkins, CEO of AI drug discovery company Exscientia. “At our Oxford offices, I think we've got nearly 50 different nationalities represented. So it has this huge diversity of talent from all across the globe. It’s an incredibly attractive proposition as an employer.” That international talent is not simply a product of the university—which just topped the Times Higher Education World University Rankings for the eighth consecutive year—but also the standout, industry-specific clusters that have sprung up around Oxford and the wider Thames Valley region.

Grand ambitions

Consider the concentration of nuclear fusion companies. Nuclear fusion involves smashing atoms together to produce heavier ones, releasing vast amounts of energy in the process. The promise is unlimited, cheap, clean power for the entire world. “This is kind of ground zero for fusion—this is the fusion cluster,” says Warrick Matthews, CEO of leading nuclear fusion company Tokamak Energy. “Major fusion conferences are held here, and just up the road from us are a number of other private fusion companies, as well as the UK Atomic Energy Authority’s Culham Campus, which has been the centre of the global fusion industry for decades.” Fusion power is extraordinarily challenging to produce: It effectively involves creating a star on Earth. Managing the extreme temperatures, and controlling the plasma state in which matter exists at those temperatures, are towering problems. The cluster helps those companies engaged in trying to surmount these challenges, because it makes it easier to collaborate with others in the space, and also to find people with the relevant specialist skills. “We are currently 250 employees—we have 60 PhDs, we've got 75 MScs—so a hugely qualified workforce, and many of those from the Oxford area.”

The Thames Valley is able to serve a number of frontier industries in that way: It’s also home to a leading cybersecurity cluster and space cluster, while Oxford itself boasts science hubs such as Langford Science Park, Science Vale, Milton Park, and Harwell Science and Innovation Campus. These kinds of clusters are not only important for drawing talent, but also for boosting productivity, galvanising new businesses and fostering innovation. “There are a lot of other countries that are pretty jealous of what's been created here,” says Matthews.

Oxford’s geographical position in the UK is another vital asset to those with grand ambitions. Not only is it relatively close to the research powerhouse of Cambridge, it’s also striking distance from London. When ZeroAvia was setting up its UK base, that was a crucial consideration. The company is developing hydrogen-electric engines for aeroplanes to reduce aviation’s carbon emissions, which are responsible for around five percent of human-induced climate change. The fuel cells that power ZeroAvia’s engines use green hydrogen, produced by splitting water into hydrogen and oxygen with renewable energy. The business needed to base itself at a regional airport that had a track record as a home for innovators. Cotswold Airport was therefore an obvious choice, especially because of the proximity to the capital. “We have an hour train to Paddington, and we have a finance and strategy team that's based in London,” says Katya Constant, ZeroAvia’s CFO. “Most of our work with investors and government is London-based, and it also means we can easily bring people to visit us at our base, so the proximity is really helpful.”

But what draws so many impact-minded businesses to Oxford in particular? After all, plenty of cities have talent, clusters, and universities. Exscientia’s Andrew Hopkins says one unique factor is simply the name recognition. Anyone trying to solve a challenge on a global scale typically needs global reach, and Oxford helps with that. “The fact is that Oxford really punches above its weight internationally, on so many different fronts,” he says. The role of Oxford in the world-leading vaccine research that helped tackle the Covid-19 pandemic has only burnished its status. “International investors recognise Oxford as a centre of excellence.”

Hopkins says this has directly served his company, which uses AI to discover, design, and develop drugs as quickly and effectively as possible. The idea came to him in 1996 when he was reading for a PhD in physics at Oxford University. “I was working on anti-HIV drugs, and there were very few of them at that time, and it was a huge problem,” he recalls. “Walking home one day past college at about two in the morning, I thought: There must be a better way to design drugs. Why should it cost billions of dollars potentially to bring a drug to market? And so I had this idea about using computational approaches to democratise drug discovery, and it stayed with me ever since.”

Exscientia was set up around a decade ago as a spin-out from Dundee University, where he was working as a professor, and then relocated to Oxford soon after. It now employs more than 450 people globally, has partnerships with major pharmaceutical companies, and floated on the Nasdaq in 2021 with a valuation of $2.9bn. “From day one we've always considered ourselves a global company,” says Hopkins. “Oxford’s status, plus its closeness to Heathrow, has been hugely beneficial.”

Since he moved the company to Oxford, Hopkins has felt its startup ecosystem come into its own, and make a name for itself as a nexus of discovery-led enterprise. You only have to look at the Oxfordshire WIRED Trailblazers cohort to see how diverse and pioneering it is. “I would not underestimate what has happened in this city,” he says. “We have several unicorn companies now in the Oxford area, and we’re creating a real buzz. And with so much of the scale-up ecosystem focused on tackling the big issues of our time, we can expect a lot more than buzz. Oxford really is a city that is set to change the world for the better.”