The voracious US appetite for Cambridge UK AI technology has been evidenced yet again with a $250 million swoop by Microsoft for SwiftKey, which was founded by two Cambridge graduates.

While SwiftKey is now anchored in London it retains a number of Cambridge-based investors who recognised the strength of the iP when Jon Reynolds and Ben Medlock founded the business.

This is the third startup based on Cambridge-born IP swallowed by American giants in recent times following Google’s $577m (£400m) acquisition of DeepMind Technologies and Apple’s swoop for VocalIQ in a deal worth up to $100m.

American corporations have now paid around $1 billion for three Cambridge-born startups. Business Weekly gave SwiftKey its first draught of the oxygen of publicity when it was known as TouchType; founded in 2008.

It has grown exponentially since and had over £8m in sales in 2004. Some media sources are viewing this latest deal as another battle in an ongoing war among US – notably Silicon Valley – tech titans to raid Cambridge for the next big thing in Artificial Intelligence.

Microsoft’s coup represents a missed opportunity for Google; as we reported in 2012, SwiftKey was named top mobile app at the Mobile World Congress in Barcelona and trumped Google Wallet for the accolade.

It had become the most downloaded Android app in the world after being chosen by Google as one of the few applications to celebrate its 10 billionth app download. 
The company makes a predictive keyboard powered by artificial intelligence that is installed on hundreds of millions of smartphones.

The FT is reporting that the co-founders will each scoop around $30m from the Microsoft acquisition, but it is also another fantastic exit for Cambridge investors who kept the faith in the early days of the business.

Before the Microsoft deal SwiftKey had raised around $20m in VC cash, including from Accel Partners, Index Ventures and Octopus Investments. Microsoft will now accelerate development of SwiftKey’s technology for Android and iOS; it has a proprietorial Word Flow keyboard for Windows Phone that it’s also bringing to iOS soon. It will integrate SwiftKey into its current tech offering, according to Microsoft confidants.

The FT quotes Microsoft’s Harry Shum as saying: “We love SwiftKey’s technology and we love the team that Jon and Ben have formed. We believe that together we can achieve orders of magnitude greater scale than either of us could have achieved independently.”

On the SwiftKey website, the founders add: “We’re excited to announce an important milestone on SwiftKey’s journey. As of today, we have agreed to join the Microsoft family.

“Microsoft’s mission is to empower every person and every organisation on the planet to achieve more. Our mission is to enhance interaction between people and technology. We think these are a perfect match, and we believe joining Microsoft is the right next stage in our journey.

“Eight years ago we started out as two friends with a shared belief that there had to be a better way of typing on smartphones. We’ve come a long way since then; today hundreds of millions of people around the world, and many of the leading mobile manufacturers, rely on our language prediction technology.

“Our users have saved an estimated 10 trillion keystrokes across 100 different languages, which adds up to over 100,000 years of reclaimed typing time.

“Our number one focus has always been to build the best possible products for our users. This will not change. Our apps will continue to be available on Android and iOS, for free. We are as committed as ever to improving them in new and innovative ways.

“We owe a lot to the invaluable input of our users, including our 130,000-strong VIP community and the many thousands of others who have been with us since the start. Their energy, honest feedback and eagerness to share our products have been the driving force behind our growth.

“At times like this people tend to focus on founders. However, the heart of our company is the awesome team who chose to share this journey with us. We want to take this opportunity to thank them for their dedication and hard work. We never would have come this far without you.”