What is going to be the impact of Brexit on UK tech startups?Will the flat-whites downed by the geeks of Shoreditch turn even flatter?
That’s been the topic on the lips of almost every observer of the scene in the last few weeks, especially given how international the staffing is in most tech companies, particularly in London.
It’s also a major theme of Techcrunch Disrupt London this week, held in the Copper Box on the former Olympic Park.
We surveyed the UK’s tech scene about Brexit and came up with a range of views which varied from depressed to stoic through to vaguely optimistic.
Over the last month TechCrunch polled 300 members of the startup community in London and the wider UK, split between 150 startups and 150 investors. Some were on the Leave side and some for Remain.
A few Leavers had ‘buyer's remorse', while others were bullish about Brexit’s potential benefits for startups. Several expressed confidence that the City of London and mayor Sadiq Khan will come through with measures to help the startup community specifically in London. He has already said he has ploughed more than £2.5m into the capital's startups since the vote for Brexit in a bid to show the world the city's "open for business”.
But they were far less positive about Prime Minister Theresa May’s government. And as many as 20 per cent of founders said they had already had employees leave the UK on account of Brexit.
The biggest issue facing them is access to talent, especially from Europe. “Stop this immigration and hard Brexit scaremongering,” said one founder, under condition of anonymity.
Certainly the vast majority of tech founders flat out rejected home secretary Amber Rudd’s call for businesses to register foreign nationals, even when she withdrew the statement. And Theresa May’s recent trip to India impressed almost no-one, with most rejecting India as a source to make up for post-Brexit gaps in talent.
So what do UK tech founders and investors want?
By far the number one concern was a provision in the law permitting EU talent in the UK to remain and providing UK-based founders a way to recruit and bring to the UK talent in the EU.
A typical call was for the UK to "build up relationships with other European countries, and make all foreigners feel welcome in the UK again.”
And unfortunately the confidence in Theresa May’s Conservative government ability to protect the startup community from the negative impacts of Brexit fell progressively throughout the survey’s period. That said, most wanted the government to go through the legal process of the High Court as a way to end the uncertainty about Brexit.
As for chancellor Philip Hammond’s plans to plough £400m into venture capital, City A.M. itself found that most in the tech community considered it a side-show when set against the continuing issue of the UK's digital skills gap.
It’s a drop in the ocean against the £2.3bn invested by the European Investment Fund in EU startups.
The EIF invested €656m ($728m) in Britain alone last year, of which €295m went directly into venture-capital funds. UK VCs say it would make sense for the UK government to pick up the shortfall if EIF funds disappear. The Treasury has merely promised consultations on this.
That said the British Private Equity and Venture Capital Association, a trade body, says Brexit could give a boost to VCs where currently they may be limited by EU state-aid rules.
Against this uncertain outlook is the fact that London’s tech scene is in rude health.