Brexit — what should British startups do?
The brits will vote on Brexit tomorrow and the polls are eerily close — whereas a month ago the “Leave” option only had 18% probability of happening, now it almost looks like a coin-toss.
The poll-trackers are showing that younger and more educated brits want to stay in the EU and older and less educated people are more likely to vote “Leave”. So, it makes a lot of sense that 87% of Britain’s tech sector opposes leaving the EU. There are lots of good arguments for staying IN as explained by prominent tech folks here, here and here. There should be less borders in the world, not more.
If Brexit really happens, it would cause a lot of trouble for UK tech scene — the majority of them are doing cross-border business and have many clients in the EU. Therefore, it makes sense for British startups to consider moving to the EU after Brexit. But where exactly?
I was speaking at a big conference in Croatia a few weeks ago and this chart created the most buzz. The data comes from Teleport Runway and it shows that running a startup in Croatia can be done with a 4x smaller budget than in London. Yes, everybody knows London is expensive, but when looking at the real numbers, I often see disbelief in peoples’ faces. “Are the differences really that big?” Yes. If that startup has a million dollars in the bank, they can survive one year in London and four years in Zagreb.
Figure 1. Comparing costs of running a startup in Zagreb and London
Surely this is not only Croatia — the whole Eastern European block has a similar cost base. Smart startups have already started using that, like Transferwise, that has many business partners in the UK and therefore a sales office in London, but their development centre and biggest office is in Estonia. They have a global client-base and this kind of setup makes a lot of sense.
Surely cost is only one issue. There are many other factors that are important to a startup when choosing their location. And there is no single right answer — startups have different needs and therefore “the perfect city” really depends on the type of startup.
If a startup is looking for a city with an active startup scene, this map shows that while London is clearly number one in Europe, the second group is not far behind — Berlin, Amsterdam, Paris and Barcelona are also more and more active.
Figure 2. Startup scene score in Europe (Source: Teleport)
Having lived in Berlin this year, it really surprised me how reasonably priced the city is, considering the activity of the startup scene. Renting an apartment is more than 3 times cheaper compared to London.
Figure 3. Costs of Living in London and Berlin (Source: Teleport)
So, if Brexit really happens, many UK startups need to start doing this kind of research. And if we are lucky and the brits will vote “Stay” … this type of analysis still pays off. Here are some tools to use for that:
1. Teleport Runway — to compare costs of a startup in different cities.
2. If you are a startup founder or talent on the move — find the most suitable city for you using the Teleport Cities search.
3. Compare London to other global cities.
London and Silicon Valley have been the main startup hubs so far, but along with that, the cost level has increased so much that it is hard to justify not looking at other options. Technology has made working as distributed teams easier and many startups are taking advantage of that. If your clients are global, why should your office be fixed in one place?
