Brexit sees 12% of London's startups lose funding
A third of the capital's entrepreneurs have struggled to grow since the Leave vote
One in 10 London startups has lost funding since the Brexit vote, according to research published today.
A total of 12% of the capital's entrepreneurs have had investors withdraw from or refuse to contribute to funding rounds since the UK voted to leave the EU last June, London startup body Tech London Advocates' survey of 220 of its members revealed. It also found that a third have found it more difficult to grow their businesses since the referendum.
While 52% of the UK voted to leave the European Union last June, 60% of London's population voted to remain. For startups specifically, access to the EU's single market allows them to market products abroad more easily, and the freedom of movement within the EU offers greater access to tech skills that are hard to find within Britain.
Tom Adeyoola, founder and CEO of Cambridge and London-based Metail, a fashion fitting app for online shoppers, said: "We have seen the fallout from the decision to leave the European Union firsthand. Prospective employees have opted to move to other European firms, or have even chosen to stay abroad rather than return to the UK with one current staff member deciding to accelerate taking a professorship because he felt that research funding would be restricted once Britain leaves the EU.
"The government must work to mitigate the damage from leaving the European Union to startups across the UK, guaranteeing access to international workers, research funding and investment to protect the UK tech industry."
60% of respondents told Tech London Advocates that once Article 50 is triggered it would damage London's position as a global tech hub. Around a quarter believed the capital would feel little impact. A KPMG report released this week found that despite Brexit, London is still the world's fifth most attractive tech hub after Tokyo, New York, Shanghai and Beijing no change from its position in the accountancy firm's 2015 report.
KPMG's head of the technology sector, Tudor Aw, said: "Despite the uncertainty presented by Brexit and other economic factors, the UK and London has not lost its shine when it comes to its technology pedigree."
But almost a third of Tech London Advocates respondents said that since the Brexit vote, employees have expressed concerns about visa rules and regulations. Another 15% had seen customer deals collapse around uncertainty over the UK's future.
While the government has declined to guarantee the rights of EU citizens currently living in the UK post-Brexit, a quarter of startups surveyed by Tech London Advocates said foreign workers comprise up to 25% of their workforce, and 22% of respondents increased the ratio of international workers to between a quarter and half of their staff.
The research comes a day after government quango Tech City UK published its Tech Nation 2017 report detailing the state of the UK's digital industries. With a mix of data from 2016 and 2015, the report found that London digital investment hit 2.2 billion last year, and that tech workers can expect an average salary of 51,000.
Tech City UK painted a bright picture of the state of UK tech, but admitted that its own survey found a desire within the technology sector to work with government to navigate Brexit's challenge of access to skills.
Shaw, of Tech London Advocates, said: "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."
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