The Brexit May Spell Good News for Angel Investors in the U.S.
With over a month behind us since the Brexit vote, the initial wave anxiety has abated as a new Prime Minister has taken the helm and global markets have recovered. The UK economy hasn’t been as lucky. With the British pound losing 10% of its value against the dollar, the British economy is beginning to show indicators of a slowdown. Many UK and European entrepreneurs are asking: What comes next?
Opportunity. For both US investors and European entrepreneurs, the Brexit presents an unusual opportunity to discover and be discovered. London has been Europe’s innovation and startup hub that entrepreneurs from all over Europe have flocked to for the past two decades. That may no longer be the case. With the Brexit comes a lot of uncertainty — and with that uncertainty comes uneasiness in entrepreneurs. This will likely result in entrepreneurs, especially those in science and technology, turning towards the U.S.
The Opportunity for US Angels
The chance to participate in European startups is tempting for several reasons. First, since European companies often command lower valuations, they tend to make great deals. Secondly, entrepreneurial companies are driven to follow the capital. And when a European deficit exists, America emerges as a shining alternative. As these companies trickle into the American market, investors are going to be facing a surplus of investing opportunities. And the spheres that stand to benefit the most? Science and technology.
The Opportunity for European Science and Technology Startups
European science and technology companies are at a real advantage for trans-Atlantic funding. Because the applications of science and technology innovations are almost always universally utilized, there is a lower threshold for market risk. Unlike a business model that functions at a localized level, the innovations offered by deep tech companies — such as a cure for cancer or a means of traveling deeper into space — are appealing to a worldwide audience.
In making the most of a difficult situation, it is important that companies be self-aware and willing to seek capital in more advantageous markets. Though it is a long process, commercialization in the U.S. is likely to yield better results overall as European markets change. Angel money from the U.S. means getting access to resources and connections that are often vital in the survival of a company.
The Value of a Dollar
The benefits of an Americanized shift in the investing market is not mutually exclusive to startups or investors. Rather, both stand to benefit from the new weight attributed to U.S. dollars. Stability in capital is important to both investors and entrepreneurs, and as European capital depreciates, the dollar becomes the strongest source for both.
The Brexit is undoubtedly an event that will alter the future of both the UK and the European Union. And while no one is ignoring the potential fallout of such an event, it is important to look for ways to benefit from a shifting investing landscape. One thing that the world cannot afford to lose in the coming months is the investment in development and commercialization of technology that stands to make a global impact.
About the author:
Lisheng Wang is the co-founder of Propel(x), an online investment platform that brings together investors, startups, and experts to support and invest in breakthrough technologies.