Brexit could deter international startups from getting settled in the UK

Francesca Washtell
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The Silicon Roundabout In Old Street
Brexit could make the UK a less popular destination for international companies (Source: Getty)

International startups may now be deterred from incorporating and expanding into the UK market, as fears about trading uncertainty and regulations in post-Brexit Britain take hold.

A spokesperson for food-tech startup ChefXChange told City A.M.: "We were in the process of incorporating into the UK due to it having a large tech hub, as the UK Trade & Investment could offer us many benefits such as advice and assistance with investment. We could have expanded into the rest of Europe from London.

"Brexit halted our decision to incorporate into the UK, which we were due to do within the next week. We believed the UK would remain, due to polls, but now there are too many uncertainties, such as the stability of the UK, the weaker currency, higher price of imports.

"Will the cost of corporate taxes be higher? Who will be in power, as there is the likelihood of a general election in the autumn? We are waiting to see some answers to these uncertainties before we invest more time and money into incorporating."

Brexit Britain: What you need to know

ChefXchange, which connects chefs and foodies for dinner parties, cooking classes and events, is currently based in Beirut, Dubai, Washington DC and is operational in London.

Read more: FTSE 250 suffers its sharpest ever drop

According to Alain Falys, chief executive and founder of London-based fintech company Yoyo Wallet, the vote to leave Europe will also affect London-based companies that want to attract foreign workers.

Tech companies will need to adapt in order to retain the city's global tech hub status.

"For internationally expanding companies, the referendum decision of course changes the dynamics," Falys said.

"On the one hand, we need to ensure it does not threaten our ability to attract global talent to the UK that is essential in growing our business If it does, we will have to adapt, and fast, which is something tech companies do well.

However, Falys noted there could be a silver lining: "On the flip side, the weakening pound will make an investment in UK’s leading start-ups even more attractive to US, Asian and European investors, and will help elevate UK start-ups on the global map."

Read more: Sterling suffers historic crash as Brits back Brexit

However Markus Witte, chief executive and founder of the Berlin-based language learning startup Babbel, said he was also worried about the effect of Brexit on British employees working in Europe.

"The UK is an important market for us and this remains the case," Wiite told City A.M.

"It's going to take some time to see the full effects, and the outcome is far from certain – I wouldn't even be surprised to see an uplift. My immediate concern is for our large number of British colleagues here in Berlin: we can only hope that they won't be limited in their opportunities. The same goes for our partners in the UK, of course."

The UK is set to lose its gold standard AAA credit rating after the 51.9 per cent surprise swing in favour of Brexit.

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