What Will Brexit Mean for Startups?
The advancement of the digital economy prides itself on not being defined by borders. Characterized by the rise of a freelance workforce, and the open-ended innovative startup landscape, communication technologies have contributed to the birth of a global workforce.
While this all sounds ideal, the startup ecosystem, unfortunately, is not untouched by politics. Recently, the United Kingdom has stepped into the spotlight with the recent decision to leave the European Union. Considered to be one of the biggest drivers of the startup ecosystem, people inside and outside of the UK are now wondering what this decision means for the global startup community.
Brexit will affect the international startup community
While we don’t know the exact effects Brexit will have on the International startup community, we can speculate that Great Britain’s decision to no longer be a part of the European Union will shake up the UK’s startup landscape in a major way. Yoyo Wallet, a London-based Fintech company is just one of the many UK businesses that have expressed their concern that Brexit will impede startups from attracting international talent in the future.
While potential negative impact can already be seen, with corporate giants Goldman Sachs already planning to move hundreds of jobs out of London, it’s not all doom and gloom. Yoyo Wallet’s founder, Alain Faly’s believes that the UK’s weakening currency will attract major investors and ultimately put UK startups on the global map.
Brexit breeds uncertainty that could hinder innovation
As it stands, Brexit is expected to take two years to complete, but there are murmurings that it will take much (much) longer. This leaves the United Kingdom in a state of uncertainty for at least the next two years, and startups of all kinds, especially those within the financial services sector will certainly be affected by an unpredictable market.
Currently, the UK’S financial sector is responsible for generating over two million jobs and serves as the country’s biggest export industry. The decision to leave the European Union could have far-reaching consequences for the future of innovation. Not only will it be more difficult for startups based in the UK to acquire funding, it will also affect the flow of funding going into other European countries that have greatly benefitted from the UK’s contribution to funding pools within the EU startup scene.
Brexit could take data protection laws in a new direction
Out of the majority of EU member states, the United Kingdom has been the most lenient when it comes to cracking down on regulations within the tech industry. In short, the way data crosses borders will most likely change when the UK is officially no longer a part of the European Union. While new data regulations and privacy acts may not appeal to European Tech firms, they could make room for potential partnerships between countries like the United States, which has already expressed interest in strengthening its partnership with the UK in the future.
Brexit could cause London to lose its title as ‘startup capital’ of Europe
Currently, London is the startup capital of Europe. Thanks to a wealth of incentives, like the Tech City programme, which launched in 2010, the startup scene in London has created hundreds of thousands of jobs, in addition to generating millions in international investments. But, that doesn’t mean that there haven’t been plenty of cities close behind, one of them being Berlin. Now that article 50 has been officially triggered and Brexit negotiations are taking place, there are rumors that the German capital will soon earn the title of European startup capital. Currently, this sounds like good new for European entrepreneurs, but some are voicing concerns that the UK’s exit from the EU will cause the single market to lose power and has left some worried that Europe will be less capable of keeping up with global competition.
No matter the outcome of Brexit in the end, the results will certainly change the future of global startup culture. Luckily, startups are built on a value system that promotes collaboration, flexibility, and innovation, so there’s a good chance that startup ecosystems around the world will quickly adapt and continue to thrive.
Latest posts by Megan Harris
- What Will Brexit Mean for Startups? - September 5, 2017