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The first 48 hours after the referendum result spoke volumes in silence. No one in the fintech sector was saying anything, at least not openly to media. Literally nothing. There was nothing to say.
According to one of our sources, you could “smell the fear” at Level 39, the fintech hub in London’s Canary Wharf. And Eau de Fintech was a heady mixture of shock, disappointment and wondering what the hell had just happened. Two weeks later, though, it’s business as usual.
It’s a reasonable response. Brexit is a succession of unknowns. There’s nothing much to say about it that isn’t pure speculative opinion. In terms of market reaction, did we just experience the preview or the main event? Is Brexit actually going to happen? When? What’s going to change if and when it does?
This is either a great opportunity or a serious risk, and it depends almost entirely on how agile and truly lean that companies and their decision-makers are.
The appropriate and proportional response to Brexit should be to ensure that response can be executed quickly once the known stops being unknown. Beyond that, any response at this stage is premature, although a little planning might be in order, and a Brexit strategy might need to be included in pitch decks for the next few months.
Impact on startups
Will new fintech startups keep being formed? Yes, maybe a few less. Maybe the quality will improve. Maybe they'll be founded with the in-built knowledge that they may have to adapt to a changing market. Nothing new there, then.
Will fintechs keep being funded? Sure, they still are being. Maybe they'll need to show investors they are Brexit-ready, whatever that means for their specific sector. Investors aren’t going to wait to see what happens – it’s going to take years to find that out. Investors just want reassurance that, whatever happens, the company has given thought to it and has some sort of contingency plan in place.
Will talent acquisition be easy? No, but then it never was. Maybe we will need to look further afield.
It’s a fair bet that the Brexit situation will increase the intensity of competition. Not competing fintech companies, but competing hubs. London the Great is wounded (they think) and now’s a good time to dart in for a mouthful of full fat fintech flesh. There’ll be attempts from non-UK hubs to poach UK fintech companies, and if they can get funding and support infrastructures in place, some may just succeed, a bit, for a time, until the UK responds in kind, which it will.
So things are probably going to hot up, slightly. But the doom that was the referendum result has been diluted into continued optimism with an eye on possible responses to potential problems that might happen at some time in the future.
In other words, we’re over it already. And whatever happens in the coming months and years we’ll just keep expanding and scaling and diversifying and improving anyway. We’ll let you know if anything changes.
PS Join Tech Unity to be on the safe side.
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