by borne . June 22, 2016
In a recent survey by Silicon Valley Bank, 72% of start-up executives said they thought leaving the EU would have a negative effect on their business.
There is no denying that there is a far from positive outlook on Brexit when it comes to starting and growing a business.
Here at Borne Digital, we take a look at the possible implications for tech start-ups, should Britain leave the EU.
1) London as a tech hub
Currently London is the top technology hub in Europe, a status that many worry it won’t be able to keep, should there be a vote for Brexit.
Although some may argue that the UK’s membership in the EU has little bearing on the amount of people choosing to start a company in the capital, the economic uncertainty that may come with a Brexit vote could drive founders away from the London, meaning less jobs and less money in the tech world.
2) Reduced talent pool
Perhaps the biggest affect that leaving the EU may have on the UK is increased difficulty in hiring workers from mainland Europe. The predominant worry for start-ups seems to be the highly reduced pool of skilled workers to choose from, and it is clear that the red tape around hiring is the last thing business founders need.
Supporters of Brexit seem adamant that the British economy will benefit from leaving the EU. Unemployment will fall, and wages will rise. But are these obviously beneficial potential results really relevant to tech start-ups? It seems not.
Currently highly skilled tech workers don’t seem to be taking jobs from British nationals, rather, using their skills and talents to help British start-ups flourish.
Whilst the benefits of increased employment and higher wages cannot be overlooked, when it comes to tech start-ups, it is predominantly technical skills that are needed, more of which can often be found in Eastern Europe.
Although many supporters of Brexit argue that preferential visa rules could be refined so we still have access to skilled workers, it seems unlikely that this would occur without huge administrative work and high fees, which understandably entrepreneurs would like to avoid.
3) Foreign Direct Investment
Another important point to consider is whether a Brexit vote would reduce significant foreign direct investment (FDI).
Bank of England head, Mark Carney, has predicted a short term drop in FDI, should the UK leave the EU.
Although it is unclear to what extent Britain’s EU membership effects the amount of FDI we receive, it is clear that immediately after a Brexit vote there will be a period of uncertainty, which may detract investment and subsequently hinder UK based start-ups.
4) Too restrictive?
Some Brexit supporters may argue that if the EU is so supportive of start-ups then why are great global companies such as Amazon, Google, Facebook and Apple all American?
Perhaps, the UK needs to simply leave the confines of Europe and embrace a global future instead, with start-ups encouraged to flourish away from the restrictions of the European Union.
It has even been argued that the EU is more restrictive than Brexit itself. Perhaps the endless rules and regulations seem instead to favour large organisations that, if anything, hinder start-ups by stealing their business.
Ultimately, we cannot predict the immediate affects on start-up companies, but that won’t stop us all from trying.
Borne Digital want to hear from you! How do you think Brexit would affect your start-up, or just British tech in general?
Are you convinced it’s all just scare stories?
Tweet us your opinion! @borneagency