Lean In, Not Brexit
Why the British tech community has a once-in-a-lifetime opportunity to shape Europe’s future
A lot has been said recently about whether or not the UK should leave the European Union when Britons go to the polls on June 23rd.
From a technology industry perspective, proponents of the stay campaign have highlighted three main effects of a Brexit: stopping the free-flow of skilled labor would hurt Britain’s technology companies, who would then find it harder to scale into Europe’s 500 million people market. The knock-on effect of both those restraints will see less global businesses setting up shop in the UK, the remain camp argues.
I believe those arguments are important and essentially true. But there are other, perhaps less obvious reasons why I think British founders of technology startups in particular should vote to stay in the EU.
And, as always, I think founders should think in contrarian ways, so I’ll start with that.
The Brexit debate has been about either leaving Europe or staying in. But staying in has also been framed as “more of the same.” Perhaps there are other ways of staying, chief among them to stay and create the European Union we want.
As a Swede living and working in London for the past 10 years, and operating across Europe’s technology hubs, the one thing that has become increasingly clear is that almost nobody is happy with the way the EU is run.
I hear it from Portugal to Prague: the EU needs to be fixed, its entrepreneurial spirit needs to be stoked, its red tape needs to be cut; nobody is happy with the way the EU works. I hear it in Britain too.
But here, perhaps more than anyone else in Europe right now, Britons have a once-in-a-lifetime opportunity to shape Europe’s future. British tech companies are more European than ever, and they benefit from being part of Europe. They’ve got a better shot than previous generations at shaping Europe because they are much closer to Europeans than any other Britons have ever been — they’re practically inside their pockets, on their screens, and in their headphones. Now, British companies are delivering food to Europeans’ homes, British apps identifying the songs Europeans’ love, British payment systems Europeans are using to trade with and send money around the world. It’s British apps that help Europeans find cleaners and handymen, British funding platforms that help launch European businesses, and the list goes on.
Europe is also a happy hunting ground for British tech investors. Data from Dealroom.co shows that of the $17.8 billion raised by European companies in 2015, roughly $9B (50%) came from UK based VCs. Of that, roughly 50% was invested in UK companies and 50% outside of UK. That’s smart money: Almost half (48.9 %) of all enterprises in the EU-28 reported innovation activity during the period 2010–12. R&D spending in high-tech sectors by EU-28 businesses increased by an average of 4% per year in 2005–2013, reaching EUR 180 billion in 2013. Europe is not static — it’s being disrupted by tech, but there’s lots more to play for. What better time to scout out Europe’s universities, co-working spaces, and accelerators for the next great idea? There are over 5000 active angel investors in Europe and over 25,000 annual tech meetups. British tech entrepreneurs are very much a part of that.
They have the street cred to make the changes Europe needs.
There is no debate amongst ambitious tech entrepreneurs that free trade and a free-trade zone is good for business. The EU at its most basic level is a free-trade zone, or at least it was supposed to be. And free trade is, at its core, a very British concept. Imagine the opportunities in an EU with British values at its core. Instead of creating ‘Old England’ again, British founders should be helping to shape a ‘New Europe’ where a home market of 500 million people gives their companies an immediate competitive edge over startups scaling in the US. Now is the time to lean in, not be passive-aggressive about EU reform.
At Atomico, we’re always telling founders that they should learn to look around corners. Looking around the Brexit corner, I see a good chance that a Brexit will set off a domino effect with other countries questioning their role in the Union. If Brexit leads to the beginning-of-the-end of the European Union, we might go back to the way things were a generation ago, where doing business across Europe was much, much harder. Some of the younger founders weren’t around back then, and some of us older types may have forgotten. It wasn’t pretty. Europeans couldn’t automatically work in the UK. Trading across multiple currencies was a nightmare. One thing is for certain, we wouldn’t have opened Atomico in London were the UK not in the EU.
Can forward-looking founders, running companies whose business models are based on the free flow of data, afford a return to a big, walled-off European garden?
But the leave campaign makes a convincing argument about how Europe is always regulating, rather than encouraging innovation, and that Britain would be further sucked into this “analogue continent”, where no success goes unpunished. The EU holds us back from being effective innovators, the argument goes. Competition authorities in the EU are indeed trying to protect local incumbents by cracking down on Silicon Valley giants. Through numerous activist data protection authorities, European regulators are also trying to “protect data” instead of allowing it to flow with transparency and user control.
I agree these are serious problems.
But these power struggles –like the free trade agreements that came before them — are still being hammered out. If Britons are not in the room when crucial data deals are made, Britons can’t influence them. And since most business in the future will run on data, it’s crucial that Britons get the chance to materially influence that debate.
Above all, I believe that founders of British tech companies can and must take the lead in infusing the EU with all that’s healthy in Britain’s values: its penchant for punching above its weight, its innovation, its ambition to take on really big challenges, its never-say-die attitude, its disdain for red tape, and its openness to the outside world.
Changing Europe from the inside is a challenge worthy of Britain, and who better to lead the charge than Britain’s plucky tech founders.
