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Years in the shadow of Brexit have been, against all odds, a golden age for British technology. We have seen multi-billion dollar cash outflows – including Zoopla and Farfetch – and record funding, with approximately £ 2.6 billion deployed in the United Kingdom in the first two quarters of 2018 alone. By the time the UK finally leaves the EU, it will not change – even if Brexit will cause a shift in focus for the sector as a whole.
There are reasons to be optimistic. The success of a technology start-up still depends on three essential ingredients: access to capital, access to talent and access to markets. Great Britain post-Brexit will remain well placed on all three. Leaving the EU, however, changes the comparative advantages of Britain and will determine the type of startups that can thrive in the country's ecosystem.
London will remain the European Capital of Venture Capital. According to KPMG, more than twice as much venture capital has been deployed in the UK than in Germany in the third quarter of 2018. London remains the favorite place of international funds looking for a European headquarters , as evidenced by the presence of SoftBank in the United Kingdom. Since the referendum, Silicon Valley's largest funds have led major investments in ambitious UK companies globally, from Sequoia's $ 50 million financing to Graphcore to Greylock's investment in my own business, Entrepreneur First. The British Business Bank – a UK state-owned bank providing credit to small and medium-sized businesses – is bursting with new cash and has largely taken over from the European Investment Fund.
Access to talent will be a thorny issue. The opportunity for talented software engineers from all over Europe to join and contribute to UK startups has been crucial to enabling the UK's technology boom in recent years. The end of the freedom of movement of EU citizens is a blow and the technology sector will not escape.
However, UK technologies will probably still be able to attract talent, especially at the highest skill levels. This is for two main reasons. First: The British Tech Nation visa system is one of the most generous in the world for extraordinary people – and the number of visas available has doubled in the last two years. This is a real victory that the sector must defend and eventually expand.
The second reason is the exceptionally strong British university. Times Higher Education ranks Oxford and Cambridge among the top two universities in the world, with Imperial College London among the top 10. These institutions and others will continue to provide the technology sector with world-clbad talent, particularly in areas such as AI. In turn, this means that the disruption in higher education institutions is the biggest hidden risk badociated with Brexit for start-ups: the industry needs to partner with universities to mitigate the worst consequences of funding research and development. collaboration.
Another risk has less to do with the rules of immigration than with more with the national music atmosphere. Even if talented people can enter the country, does this look like a place where they will be welcome? The British government has not done much to send a warm welcome message. startups and investors will have to be stronger than ever.
Finally, the markets. The UK is leaving the world's largest single market, but this affects less technology startups than many other companies. Israel, the original "Startup Nation", has demonstrated that starting life in a small market forces entrepreneurs to think globally from day one.
It is important to note that leaving the single market will have the least impact on the most ambitious startups. The regulatory harmony of the EU has always been somewhat counterbalanced by the linguistic and cultural diversity of startups. In any case, these companies do not set any geographical limits to their aspirations. The prosaic yet fundamental badets of the UK – a favorable time zone and English – will keep the country attractive as a springboard for launching a global business.
What does all this mean for the comparative advantages of the United Kingdom? The post-Brexit Britain will be a great place for startups who need access to abundant and patient patient capital, top talent in cutting-edge research areas and a customer base important world. Although many companies meet these criteria, the model is particularly attractive for "deep tech" startups. These are companies working with new technologies, such as AI, virtual reality or synthetic biology. As shown by the growing success of UK companies such as Darktrace, Improbable and Tractable, the UK has a solid foundation in this area. It is on these bases that the entire ecosystem – founders and venture capitalists, of course, but also the government and universities – will have to rely on British technology to continue to thrive.
The period since the referendum has been marked by great uncertainty and should continue for many years. Whatever the political settlement to come, if the United Kingdom fully exploits its strengths, it will not only be able to save its technological ecosystem, but also take decisive action to become the Deep Tech Nation of the world.
Matt Clifford is the General Manager and Co-Founder of Entrepreneur First
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