Brexit: A bright opportunity or “No Silver Lining” for start-ups?
Brexit has loomed over us all summer, a black cloud of confusion and disappointment. Like most Brits I expect, I’ll be pleased when the American election gets underway so we can pass someone else the keys to the mad house and be freed from this media monsoon of speculation. But speculate we will and in this time of uncertainty I have been considering what the Brexit vote will mean for start-ups in London.
Last week I attended a panel discussion chaired by TechCrunch head journo and industry commentator Mike Butcher. Although Butcher tried to remain upbeat, the panel gave us little to feel optimistic about. When questions were thrown to the audience one entrepreneur begged the panel ‘is there ANY silver lining to Brexit?’. The panel consisting of Brynne Herbert CEO of MoveGuides which closed $15.6 million Series B funding last year, Kristjan Lepik Head of Partnerships for Teleport and Alain Falys of Yoyo wallet who closed a $10 million Series A round last year took it in turns to lament the decision to exit the European Union and the negative affects it would have on the start-up community in the UK. Lepik of Teleport, which rates cities in the world based on determinants such as quality of life, salaries and living costs — ‘Move to your best place to live and work’ admitted it could be good for his company. Since London had thus far been the first choice for entrepreneurs setting up businesses they might now look for guidance to move elsewhere making Teleport’s platform indispensable. Brynne Herbert, an American national now living in London spoke articulately about the issues at hand and noted that the weakening of the pound against the dollar meant a likely influx of business from the US to the UK. Unsurprisingly some in the audience struggled to see the weakened pound as a positive. Herbert’s company which helps companies and individuals relocate felt torn between personal disappointment and professional optimism for the Brexit vote. She voted remain and is concerned what impact the vote will have on her diverse work force but of course sees the positives in more businesses seeking relocation advice. Her phone had been off the hook since the vote with clients looking for answers and reassurance. Some audience members questioned the likelihood of a talent vacuum stating that London had unmatched infrastructure and protective regulations in place, a stellar community of experts and resources unlikely to move abroad and a credibility which couldn’t be replicated over a short space of time.
It starts to sound like I’ve been hitting up every Brexit talk in town when I say that the overarching theme of the Seedrs panel discussion ‘Brexit: One month on’ at the Digital Catapult Centre (great view) was macro pessimism and micro optimism. CEO of Seedrs, the leading crowdfunding platform, and long-time start up advocate, not to mention UK immigrant Jeff Lynn (Lynn moved from the US and became a British citizen a number of years ago), led an interesting and thoughtful discussion with panellists including angel investor Julian Sutton, Landbay CCO and co-founder Gray Stern and Simon French Chief Economist at Panmure Gordon. This micro optimism is born out of the very fibre of what a start-up is and how it functions. A start up is not a large, bureaucracy riddled dinosaur of an organisation. It can adapt and respond to events as they happen and “out manoeuvre” much larger competitors in its industry. Stern of peer to peer mortgage lender was particularly vocal on this point. For the simple reasons of agility and size, the panel largely believed the Brexit vote should be seen as an opportunity by start-ups on a micro-level. Simon French’s insertion that the UK still holds a great deal of respect abroad echoed my own experiences working in China. How long this feeling of aspiration and credibility will last through the next few years of uncertainty is important to consider. Croatia was cited as an excellent place to set up a business because of the relatively low overheads and cost of living, Dublin and Berlin other attractive options.
I was in Italy when the news broke. A week away, on Ryanair flights, an affordable euro hopping break so many of us have become accustomed to. I was with a friend from university who is now more likely to be found in Cannes, Berlin or Athens than London, on the film festival circuit, and a handful of French and German entrepreneurs. I woke to her gasps of despair as she scrolled through BBC news. Over the next few days frustrated conversations dominated our al fresco lunches. Independent film budgets would be cut in an industry where European funding had been propping it up. Will businesses in the EU still see the UK as a viable partner? Will the EU now break down and chaos ensue? It was depressing and turning to social media didn’t offer any relief. Friends, turned ferocious political campaigners, calling for another referendum, denouncing those who had voted out, disregarding the democratic process, it felt more like life under communism than in the cradle of democracy. Now, one month on, Britain is quietly coming to terms with the result and London is facing up to the fact that it has become grossly out of touch with many parts of the UK.
Working day-in-day-out with start-ups in London I hope that the excellent work that has been done over the past five years to encourage funding, develop accelerators and attract the best talent won’t be jeopardised. We can only watch and wait.