Tuesday 12 July 2016 8:03 pm
The Leap 100: Does Brexit really mean business?
Britain’s decision to leave the EU means taking a hit for The Leap 100. Sixty per cent say Brexit will impact their ability to grow in the short term. Long-term, that diminishes to 52 per cent, but the majority are still feeling the sense of uncertainty acutely. “We're waiting on further detail of what the process of leaving the EU will look like before we can comment on any specifics,” says one founder of a well-known London brand. Several say they’re curtailing expansion in the UK and focusing on Europe and the US instead.
With the expression “avoiding a knee-jerk reaction” persistently cropping up, the message from most of the fast-growing companies is that the process of Brexit means a pause for business.
One chief investment officer comments: "we are liaising with our partners, largely to ensure that no undue panic sets in, and also looking at specific issues – for example, those relating to taxation and employment issues. More generally, we are adopting a ‘wait and see’ approach.” Several others state that they’re deferring hiring decisions.
Most of The Leap 100 have highly diverse workforces, and have sought talent from across the globe – and naturally heavily from the EU. Several stress the concerted effort they’re having to make to reassure their staff. One founder echoes others in saying that this has heightened the importance of communication: ensuring that employees know where they stand and, if necessary, are further incentivised through company performance-based compensation.
The hit sterling has taken also came up frequently among the group – in the main, it’s forcing them to act faster. Many are currency hedging to limit exposure, and one member has brought forward contracts in euros and is retaining assets in foreign currencies.
Another respondent comments: "The decision to leave the EU and subsequent fall in sterling against the dollar has increased the imperative to scale our business more quickly in the US and therefore lessen our exposure to European markets. The immediate impact has been to increase our costs by around $200,000 which, while not a threat to our plans, will possibly mean that we may have to make savings in other areas.”
But Brexit isn’t seen as all bad. Many of The Leap 100 are exporters, so a weaker pound presents an opportunity. And while many feel we’ve “more drama to come” and are just hoping that the uncertainty diminishes soon, a good handful are “still positive”. As one City-based founder says: “good companies will continue to be good companies and would adapt in either scenario.” Another adds that Brexit was necessary as a way to change the EU for the better. In the short term, the challenge is to maintain investor confidence,