TONY HOOLEY started his electronics company 10 years ago and knows only too well how hard it is to make money out of technology. This year, however, he has achieved enough to make his rivals jealous.

Since he started 1 Limited, he has been trying to turn a conventional loudspeaker into something like a computer. This drives a number of transducers in a thin flat box and produces the ultimate in surround sound. The “digital sound projector” does away with the web of wires of existing systems and, claims Hooley, produces better and more realistic sound.

“You can have a home theatre with surround sound as simply as plugging into the mains,” he said.

In 2002 Hooley produced an earlier version, which he licensed to Pioneer, but at $45,000 (about £23,500) it was a luxury product for dedicated enthusiasts. The latest version, which Yamaha has just licensed, costs about £800 and is “commercially more interesting”, he said.

The digital sound projector swept the competition aside to win the award for the best product of the year at the giant consumer-electronics show in Las Vegas. It is Hooley’s favourite sort of innovation: one that represents such an advance that it leaves the competition struggling to catch up with what he believes will become a volume product.

Hooley’s firm is based in Cambridge, where there are reckoned to be between 1,500 and 2,000 small high-technology companies.

As a high-tech nursery, there is probably no better place. Entrepreneurs understand what makes companies flourish and the ready availability of private equity helps to finance them.

Although 1 Limited has only 30 employees, it managed to raise nearly £4m in private equity in 2000.

“People here who have made it in high technology understand it and don’t mind investing in small companies,” said Hooley, who has raised money every year since the business was founded.

He has just taken part in a survey of 350 business leaders, designed to uncover the processes that help innovation flourish. It was commissioned by the East of England Development Agency and led by Anne Miller, a Cambridge engineering graduate and inventor with more than 30 patents to her name.

Miller is a director of the Creativity Partnership and co-founder of TTP Group, Europe’s leading industrial-technology developer and licensing company. She has worked with leading businesses such as Braun, Bosch, Bayer and Rolls-Royce.

Her inventions cover medical equipment, power tools and the machine that makes the Femdom, the female contraceptive that won a Queen’s Award for Export last year.

“We have run a course at Rolls-Royce to teach engineers the people skills they need to sell and network their ideas to the organisation. There was one chap whose ideas were worth £100m to Rolls-Royce,” she said.

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