Will investment dry up? Will talent leave? And what about funding? Courier hears from startups in finance, food, fashion, tech and other sectors on how they’ll be affected.
26 Jul 2016
British startups are bracing themselves for a radically different landscape in the wake of the decision to leave the EU. High on the list of concerns for founders are a downturn in investment, access to skilled workers and instability around the British pound. London’s promising financial tech sector has been dealt a more direct threat as have companies dependent on EU funding for research.
An almost consistent subtext of anger was shared by the several companies Courier spoke to, captured by Tom Blomfield, founder of digital bank Mondo, who described the decision as ‘unnecessarily shooting British business in the foot’.
An email thread between nearly 100 prominent figures in London’s tech scene was forwarded to Courier that attempted to untangle the repercussions of leaving the EU and address concerns about London losing its status as a magnet for talented workers. Many in the thread underlined the importance of staying upbeat to keep panic at bay.
Anxiety is palpable nonetheless, fuelled by uncertainty stemming from the political vacuum that has followed the vote. What will happen to European workers (new and existing)? What will be the terms around tariffs, trade agreements and processes of doing business with EU countries? Where will the pound stabilise and is the UK about to enter a recession? Will government moves to lower corporation tax and business rates be enough to counter the economic headwinds?
Many business owners worry that an extended period of uncertainty around these issues will chip away at confidence and restrict their ability to make plans.
Evidence of immediate change emerged in the days following the result. A property firm is understood to have pulled a £12m investment on a site in Clerkenwell while other property companies have been reviewing their projects. More positively, a cosmetics firm that wished to remain nameless said its face cream made £300,000 in sales to its French customers on the week that followed the EU result, having become considerably cheaper to overseas customers.
Several firms say they’ve been met with anxiety and even hostility from European customers and suppliers. Firms said that even non-EU partners were ‘deeply worried’ about the impact of Britain leaving the EU. The founder of Universal Works, David Keyte, said that one Japanese customer had sent an email to him with 20 detailed questions around Brexit.
Several startups said they will try to be as agile as possible, exploring all options to ride through the uncertainty. In London, three areas will be closely watched in the coming months for signs of flight: big firms (especially the tech ones), talent and money.