In its latest Startup Outlook report Silicon Valley Bank has revealed that 28% of UK startups plan to open an office in mainland Europe, as a result of the UK’s exit from the EU.
Meanwhile three quarters of the surveyed group said that Brexit will have a negative impact on the UK innovation economy.
There was some apparent good news in the report but not necessarily for the UK. It found that 81% of UK startups were planning to increase their staff. But how many of these will be UK based?
Also 72% raised capital last year, which is great news for startups but there is no guarantee the money will be invested in the UK, with investment in mainland EU already decided for many..
The prospects of further investment is not guaranteed. If you look at the latest numbers from London & Partners. In 2017/18 venture capitalist investment in UK tech companies plummeted from £2.53bn in 2017 to £1.8bn in 2018. Pretty bad when you think that in every year before last year had grown steeply with a doubling of investment from 2016 to 2017. (read more here)
Aside from the risk of the UK tech startup sector being less attractive to VCs, the potential shortage of access to talent is a major concern for tech firms.
In fact according to the Silicon Valley survey this is the biggest concern for the 75% that think Brexit will have a negative impact. “As Brexit discussions continue, 75 percent of UK entrepreneurs surveyed fear that leaving the EU would have a negative effect on the innovation economy in the UK, and their greatest public policy concern is a lack of access to talent,” said Erin Platts, Head of Relationship Banking, Europe at Silicon Valley Bank.
The survey also revealed that for 81%UK startups say that access to talent is the most important public policy issue they face. One in three respondents also said that finding talent is extremely challenging.
When I talk to fintechs access to talent is always either their biggest challenge or second biggest, if funding is more important for some.