The medieval university town of Cambridge has plenty of engineers, entrepreneurs and investors. This has allowed it to become one of the hottest sites in Europe for creating high-tech companies. But it lacks the managers, grand ambitions and easy paths to massive public offerings of stock that have built instant fortunes in Silicon Valley. The focus on technology in the so-called Silicon Fen started two decades ago with Acorn Computer PLC, which became the U.K.'s leading personal computer maker until the advent of Windows. The Fen also spawned a couple of successes, such as Advanced RISC Machines Ltd., a virtual chip designer; Cambridge Display Technologies Ltd., a monitor maker; and scores of early-stage start-ups, which now are seeing investments from venture capitalists - from Silicon Valley. Even though it doesn't rival California's mythic melting pot of new technology, capital investment and youthful talent, the area's growth is impressive. In 1995, there were 400 high-tech companies within 20 miles of Cambridge, employing 16,000 people, 8,000 of whom worked for eight large companies. This year, according to a study by economic development consultants Segal, Quince, and Wicksteed Ltd., there are 1,200 high-tech companies -counting bio-tech and hardware, software and services - employing 32,000 or more workers. What's more, most of the growth is in young companies with only 5,000 jobs in large companies. "There's no shortage of capital here, and there's no shortage of entrepreneurial ideas for early-stage companies," says Simon Cook, a Cambridge investment executive at 3i Group, Europe's largest venture capital firm. A further boost came last year when Microsoft Corp. decided to put its only non-U.S. research facility in Cambridge. Bill Gates also personally donated more than $75m (£46m) to the university's research labs this year. Local entrepreneurs say both those moves gave the area increased credibility, making it easier to get U.S. investors to listen to business plans. Still, "there is a shortage of management, serial entrepreneurs with experience, though that is coming round. And there are cultural problems," says Cook, who expects to oversee roughly $10m (£6m) in new investment in Cambridge companies this year. The cultural barrier seems to boil down to a deficiency of world-beating, Valley-style arrogance linked with greed. "We lack an equity culture, people who are driven by growth," Cook adds. "We have lots of founders who have built up businesses of 20 to 30 people, have a turnover [annual revenue] of $10 million and have a lifestyle with which they are content. Those that do float on the stock exchange tend to focus on local [English or European-focused] markets, which gives you limited upside" compared with people who want to take their products and market global. Support is arriving. The U.S.' big five accounting firms now are represented in the city. There are a handful of high-tech incubators and support organisations. The number of law firms has mushroomed from 400 to 1,300 since 1995, and the ranks of high-tech consultants, who weren't even here three years ago, stand at 1,350. "We're still not doing a good enough job of networking people, making it easy for new firms to get slotted in [and working with each other]," says Bill Wicksteed, a partner at Segal Quince and Wicksteed. The physical infrastructure also is showing signs of strain, with traffic becoming a problem, city services maxing out and clogged roads in need of upgrading, Wicksteed says. "Each acre of high-tech floor space requires 15 acres of housing land . . . a thorny problem," he says. Silicon Fen also may need Silicon Valley to thrive. Cambridge companies with global aspirations - such as nCipher Corp. Ltd., which makes nFast, a combined hardware and software cryptographic accelerator for use by high-traffic transaction sites like banks - say they must operate in Silicon Valley to have a shot. One or another of nCipher's three founders is almost always in the company's San Mateo, California, offices, building alliances, making deals, courting money and telling the company story to investment bankers in hopes of a public offering next year. "We have to have the bandwidth to maintain our profile in the San Francisco area. Partnering is key to our strategy," says nCipher CEO Alex Van Someren. "Being in Cambridge has been particularly advantageous in terms of getting money over the last couple of years," Van Someren says. "It's made it easier to get Silicon Valley funding [because they believe in the area and its track record]. That's good because you don't get the same valuation of a business in the U.K. because the risk profile of the investors is lower; they don't buy into the future potential of companies to the same extent as U.S. investors." NCipher recently completed a $3m (£1.8m) plus second round of funding that included two California venture capitalists - Los Altos Funds and Newburry Ventures - as well as security vendor Security Dynamics Technologies Inc. and U.K.-based VC Top Technology. The chief downside to being based in Cambridge is competition in hiring top managers, Van Someren says. "We can employ smart people here at much less cost than being in the Valley and we use fewer people to do more work, but the competition for managers is particularly virulent; [Cambridge companies] are taking from each other. There's not enough talent." Advanced RISC Machines, whose market worth topped $1bn (£0.6bn) in August after a July initial public offering, is not staying at home. It licenses its chip designs to companies from Intel Corp. to Sony Corp. for use in PCs, phones and computer games. "We are a bit unusual by Cambridge standards in that we've been global from day one," says CEO Robin Saxby, a chip industry veteran. "Ninety percent of our business is from outside the U.K. I basically live on planes, and we've got offices in Silicon Valley in Los Gatos, Seoul, Tokyo, development in Austin [Texas] and sales and marketing in the Thames Valley." But financial markets in Europe also may hold back Silicon Fen and other Silicon Valley wannabes, says Jim Martin, 3i's director of global technology investing. Whereas in the U.S., the Nasdaq is a large enough stock exchange with enough investors and capital to provide adequate liquidity and high valuations for technology companies, nothing on a similar scale exists in Europe's smaller and more fragmented country-by-country exchanges. "The equity markets are disjointed across Europe," Martin says. High-tech-focused stock exchanges have been successful in Germany and France, but they just list German or French companies, and that's who the investors, for the most part, are interested in. "We need a truly European market to get enough buyers and sellers to equal Nasdaq," Martin says. "That would level the playing field, Europe with America, but that's an evolution that's probably a few years away."