UK tech in Brexit funding squeeze

With Theresa May triggering Article 50 in March, the UK hits a point of no return on Brexit. For UK tech the chief fears are for investment and talent. A survey by Tech London Advocates – showing one in 10 facing investment problems – is a worrying sign on top of other industry anxiety.

london sunset

In news that will have confirmed the fears of many in industry about the impact of Brexit, a survey last week from Tech London Advocates showed one in 10 tech firms reporting investors holding back funding since the EU referendum result.

The survey is the latest in a line of news from the UK tech sector expressing concerns about the impact of Brexit on business. Influential organisations like techUK, Coadec and Nesta have expressed anxiety on a range of issues.

The TLA survey base is not vast – 220 members responded to the SurveyMonkey research in March – but its findings are an indicator of the mood in the tech sector in and beyond the capital.

Twenty-six of those TLA 220, 11.9%, said they have experienced investors holding off or withdrawing from a funding round.

The survey also found a large majority (58.2%) of respondents believing that, once triggered, Article 50 will damage London’s position as a global tech hub. This is more than double the number (24.3%) who believe it will have little impact on the capital’s status as a tech hub.

The survey suggested that tech companies continue to have doubts about the ongoing process of leaving the EU, with just over one in three (33.7%) saying it has been harder to grow their business since the referendum result.

The TLA survey coincided with the publication of Tech City UK’s Tech Nation 2017 report. In a survey for that, TCUK talked to over 2,700 digital tech professionals about what they want to see for successful growth and innovation.

Finance was among that survey’s top concerns, with 40% of respondents saying access to funding was a “significant business challenge”. In addtion, more than half highlighted the challenge of finding employees with the right skills, with a quarter calling it a “major challenge”.

At last week’s launch, culture secretary Karen Bradley pointed to upbeat figures from Tech Nation saying that the UK was “the digital capital of Europe, receiving almost two and a half times more tech investment than any other EU country between 2012 and 2016.”

We have every reason to believe that we can make the UK the best place in the world to start and grow a digital business,” said Bradley.

The minister said the government had created “one of the most innovation and entrepreneur friendly tax systems in the world”, with support through SEIS and EIS, and confirmed a review of the tax environment for R&D “to see if there’s more that we could do to stimulate private sector investment.”

Last year, TLA released a ‘post-Brexit charter’ to encourage the tech industry to come together to “make Brexit a springboard for growth and an opportunity to create a stronger, more global, tech ecosystem”.

It is the departure of tech skills from the UK that remains possibly the overwhelming concern of the tech sector, with the future of both EU citizens in the UK and home-grown tech talent, uncertain.

The TLA survey gives an indication of the reliance of tech companies on workers born outside the UK to provide the skills they need. A quarter of the 220 said their business employed up to 25% of workers born overseas. Similarly, 22.3% said that between 25 and 50% of their workforce was comprised of international workers.

russ-shaw-tech-london-advocatesTLA founder Russ Shaw said “The survey data shows that many tech leaders continue to feel uneasy about the process of leaving the EU – with both investment and access to talent under threat. Tech firms must fight for an ecosystem that can provide adequate investment and offer world-class talent to allow startups and scale-ups to grow to become the tech giants of tomorrow.

“By working with government, we can help shape a Brexit that ensures London retains its position as the tech capital of Europe and an important epicentre for global tech – with high levels of investment and a world-class skills base.”

In her speech last week, Bradley said “as we negotiate Brexit the government is absolutely clear that we want a settlement that allows us to attract the brightest and best global talent. This is a strategic priority.”

Speaking at the same event, Moonfruit founder and Entrepreneur First supporter Wendy Tan White said the UK tech industry would adapt to Brexit, while investor Saul Klein urged the sector to move forward.

Sage chief executive Stephen Kelly said the weaker pound that has followed the referendum would be tough for importers but good for exports. “The sky will not fall in,” he said.

Tech London Advocates is an independent network of more than 4,400 tech experts, leaders and professionals in the capital.

On May 11, TLA convenes senior investors from Europe, the US and Asia at a major event at London’s Here East, to “discuss the shifting tectonic plates of London and UK tech”.