After the United Kingdom voted 52% to leave the European Union, the startup community in London and Scotland — both of which voted to remain in the union — has been thrown into turmoil.
Debbie Wosskow, founder of the lobby group Sharing Economy UK, told London tech magazine The Memo: “Make no mistake, the news this morning is seismic. It is disappointing that we are in this situation and there is no doubt that the weeks ahead will be turbulent for many different reasons.”
North of the border in ‘Silicon Glen,’ the situation is much the same. John Peebles, the CEO of Administrate, an Edinburgh-based training management startup with $1.54 million of funding, told The Herald that a great deal of government-backed enterprise funding and talent came from Europe.
The Brexit decision has been disappointing to virtually all Scottish startups, Peebles told TechPortfolio. “We’re in a relatively small market here in Edinburgh, and because there is a lot of activity, many Scottish startups are looking to hire into their team for growth. That’s just become a lot harder, potentially, now that the wider EU may start to require a work visa.”
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One feature of the EU is free movement of labor; anybody born on the continent with a European passport can take a job in another European country. Although this is a startup-friendly policy, greatly widening the pool of candidates, Leave leaders campaigned against it.
Fred Destin, partner at venture capital firm Accel, told the Financial Times that the “fluidity, speed and simplicity” of this system was a huge benefit, and that the suggested replacement — a points-style system, like the one used in Canada or Australia — was too cumbersome for small organizations.
Turmoil aside, the European Union itself is keen to push quickly and make the process as fast — if not pain-free — as possible, with the President of the European Parliament looking at legally speeding up the steps, saying that uncertainty is the “opposite of what we need.”
Brexit leaves unresolved issues and no timelines or known conclusions. The labor market and free trade won’t be settled for a long time, and the pound sterling is plummeting.
Some see the final conclusion — when it arrives — as a positive. Jim Duffy, CEO of Entrepreneurial Spark, which describes itself as the UK’s largest free accelerator, says that businesses are trading across the world, not just Europe.
“Entrepreneurs will simply just get on with it and what’s important today is that they continue to focus on planning to ensure that they can navigate any turbulence in the coming days and weeks.”
Peebles agrees. “On the one hand, the instability of Brexit and a potential second independence referendum are unsettling, but on the other hand, we’re lucky that most tech startups are focused on global markets.”
Still, what many are describing as an emotional, ‘lizard-brain’ reaction from the British people is likely to have serious political consequences in the years ahead for the UK and the EU.
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Frequently Asked Questions
How did UK startups react to the 2016 Brexit vote?
After the UK voted 52 per cent to leave the EU in 2016, the startup communities in London and Scotland, both of which voted to remain, were thrown into turmoil. Debbie Wosskow of Sharing Economy UK called the news seismic.
Why were Scottish startups concerned about Brexit?
John Peebles of Edinburgh-based Administrate said much government-backed enterprise funding and talent came from Europe, and hiring could become harder if EU workers needed work visas.
Why does free movement of labour matter to startups?
It lets anyone with a European passport take a job in another EU country, greatly widening the pool of candidates. Accel's Fred Destin said a points-style replacement would be too cumbersome for small organizations.
How did the EU respond to the uncertainty?
The EU was keen to move quickly, with the President of the European Parliament looking at legally speeding up the steps and saying that uncertainty was the opposite of what was needed.
Did anyone see a positive side for UK startups?
Jim Duffy of Entrepreneurial Spark said businesses trade worldwide, not just in Europe, and entrepreneurs would get on with it. Peebles added that most tech startups focus on global markets.