The uncertainties surrounding Brexit raise multiple concerns for firms. Given the risk attached to a no-deal exodus from the EU, many would expect UK startups to worry about access to skilled professionals and VC funding. Interestingly entrepreneurs are actually feeling increasingly bullish about their prospects as Blighty continues to be the premium venture investment destination in Europe.
A new report by KPMG Enterprise, the professional services company, reveals the UK remained the top spot for VC investment in the third quarter. It witnessed an influx of £1.4bn from VCs across roughly 200 deals, up £9m from £1.31bn raised in the same quarter in 2017. Moreover, two of the European top ten deals closed in the quarter were British – biotech startup Orchard Therapeutics’ £111m series C and drug development firm Artios’ £65m series B.
However, Russ Shaw, founder of Tech London Advocates and Global Tech Advocates, the entrepreneurs networking firms, isn’t surprised to see more VC injections into Britain’s startup ecosystem. “Investors seek a track record of success, a strong pipeline of innovation and talent and assurance that companies will grow at a high rate with close ties to global markets – the UK offers all of that,” he told Elite Business. “There is no better place to invest in or to start and scale a tech business.” Indeed, it’s hardly a secret the UK has been donning the crown of the tech capital of Europe for quite some time. “This country has a long-standing tradition of entrepreneurship, ingenuity and fresh thinking that moves the needle,” Shaw adds. “Brexit is a hurdle – albeit a large one – but VCs understand that it doesn’t render obsolete the decades-long pedigree of startup success cultivated in the UK.”
Despite the surge in investment, SMEs are still wary of their future in a post-Brexit world. According to a survey done by MetLife UK, the financial solutions company, 42% of 508 company heads said uncertainty about the UK’s withdrawal from the EU is a worry for them with concerns about talent recruitment as well as funding. And according to Philip Salter, founder of The Entrepreneurs Network, the networking platform, they are right to be concerned. “Entrepreneurs can never relax – but most won’t be focused on Brexit until a deal is on the table,” he told Elite Business.“If the UK remains dominant in European venture capital funding – and it’s hard to see how it won’t given the London’s role as a world financial centre – we won’t see entrepreneurs up sticks and leave en masse. But if the UK is less open to talent, faces new regulatory barriers or experiences a slowdown then entrepreneurs may opt to move their businesses overseas.”
Indeed, while the political turmoil seems to worsen by the day, it’s best for head honchos to keep their spirits high. “What [entrepreneur’s] shouldn’t do is panic because evidently there’s still confidence in the UK startup scene regardless of Brexit and people [and] companies still want to invest in our startup talent,” advises Mark Pearson, founder of Fuel Ventures, a VC firm, speaking with Elite Business. “I would advice to keep operating as normal and when Brexit eventually does happen, reassess your options then but I really don’t see it having a massive impact on funding or investment or tech company growth.”
Pearson is not alone. Business leaders might be optimistic about the current scenario – but it’s no secret the true consequences will be seen only after Britain leaves the EU. “No one knows exactly what the investment landscape will look like after March 2019 and with so few certainties little strategic planning can be put in place,” Shaw says. “What the startup community can do is stand united in the effort to have their voice heard – the investor confidence to date is a strong proof point and adds credibility to businesses who need to highlight their value in the public eye.”
Indeed, while many wait for the government to outline a clear strategy for businesses, it’s worth ensuring you’ve prepared yourself for the worst.