What Would Brexit Mean for UK-based Tech Startups?

What Would Brexit Mean for UK-based Tech Startups?

By Nick Waller

London—The technology startup scene, by its very nature, is international. In this fast-moving realm of innovation, demand for specialist skills is far greater than supply and in the search for staff for any startup that wants to thrive, talent must take precedence over nationality or geographic convenience.  The programming workforce is therefore a highly mobile one, always ready to move to a new startup or seize an exciting new opportunity in an ideal role across the world.  Many of those roles happen to be in the UK with overseas programmers laying the coded foundations of successful British tech startups for several years.  Her Majesty’s Revenue and Customs (HMRC) earns tax from these professionals who boost the domestic economy through their work at successful startups.

Supporters of Brexit are adamant that wages will rise and unemployment will fall if Britain leaves the EU, but in reality, foreign highly skilled workers aren’t taking job opportunities from native talent. Rather, they support and enable UK-based companies to flourish and these are roles companies would be unable to fill otherwise. Tech companies are already dealing with a shortage of UK talent, and in order to compete globally and produce high value startups, it has been necessary to utilize overseas markets for highly skilled workers.

As the founder of the Global {M}, I and my colleagues have intimate knowledge of the extent of how the local tech industry relies on foreign talent, with 51% of the candidates that we have placed in UK startups over the past year coming from outside the UK. we recognize that any restriction on the flow of talent into the country will stunt the growth of homegrown startups and ultimately the economy.

A recent survey by Silicon Valley Bank found that 72% of startup executives said leaving the EU would have a negative effect on their business while 95% said it is already challenging to find the right people for their teams. Moreover, the Treasury predicts a year long recession on top of more than 800,000 job losses, if the UK votes “Yes” to Brexit.

The European Commission has been very supportive of the tech sector and it would be a shame for British startups to miss out on their funding schemes such as the 2.8 billion euros funding business support and mentorship program “SME Instrument” and the EU Research and Innovation program “Horizon 2020”, which promises nearly £67 billion (€80 billion) of funding available for startups over the next few years. Each day at Global {M}, we see the huge value we bring to our clients by employing people that can freely move across country borders in the EU to join them when there is such a competitive fight over talent. Brexit is something that risks this freedom for young businesses in the UK.

It has been said that through preferential visa rules, the UK will have the power to tailor the UK immigration policy to attract skilled employees into the areas of need, such as tech, but at the Global {M} we know from our vast experience in relocating technologists that Brexit will make the UK a less attractive and competitive place to relocate to. Ease of migration heavily influences a person’s choice of location to live and work and it’s inevitable that obtaining visas involves red tapes, fees, and sluggish and time-consuming paperwork processes. At the current rate of movements and developments in the tech industry and the high level of competition for recruiting specialist staff, there simply isn’t time for emerging startups to waste on bureaucracy. As it stands, three-quarters of EU citizens working in the UK would not meet current visa requirements for non-EU overseas workers, if Britain left the bloc.

For Brexit supporters the answer lies in developing strong tech educational programs. It will take many years to reap the benefits of creating a skilled workforce, and startups don’t have time to wait. Startups will also face the challenge of competing against larger European technology corporations for these workers.

With incubation programs, grants, and endless funding schemes, the UK has nurtured a strong startup culture and proved to be a significant innovation hub on the international stage.  In fact, in the European Digital City Index in 2015, London was rated the No. 1 city in Europe for supporting both startups and scale-ups. It would be a shame to topple Britain from its enviable position in the EU by erecting bureaucratic hurdles that limit its access to investors, innovators, and coders. We have no doubt that the effect of Brexit for UK startups will be a hugely reduced pool of talent to draw from. Foreign workers add so much to the UK both economically and intellectually. Allowing businesses to recruit freely is crucial for creating a thriving and a sustainable economy that continues to produce Unicorns like Transferwise and Skyscanner.

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Nick Waller is Founder & Director at Global {M}, a technology recruitment agency based in London.

 

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