Brexit, funding and talent wars are the biggest worries for UK start-ups

31 Jan 2018

Image: saranya33/Shutterstock

A quarter of UK start-ups plan to establish an EU outpost as the hard realities of Brexit and talent wars come home to roost.

While 53pc of UK start-ups say they don’t plan to expand outside of Britain, 25pc do plan to establish a European outpost, up from 21pc in 2017.

That’s according to the latest Startup Outlook report into the UK start-up ecosystem from Silicon Valley Bank (SVB).

‘Despite uncertainty, entrepreneurs and start-ups are forging ahead, creating jobs and raising capital’

Future Human

The study of 1,000 start-up founders and executives found that of the group that do plan a location in Europe, 14pc may even move their headquarters to Europe, which is up from 11pc last year, while 6pc will consider locations outside of the continent.

The study revealed that Brexit and the ongoing talent wars are the biggest causes of uncertainty for UK start-ups.

82pc say that access to talent is the most important public policy issue affecting companies followed by international trade (46pc) and cybersecurity (36pc).

A whopping 95pc admit it is challenging to find workers with the skills needed to grow their businesses.

Despite this, 83pc plan to expand their workforces in 2018.

Fundraising for UK start-ups in 2018

When it comes to funding, 72pc say the fundraising environment is extremely challenging.

Interestingly, 47pc expect their next source of funding will come from venture capital, down from 56pc last year, which makes you wonder if crowdfunding and initial coin offers are making an impact.

“18 months on from the Brexit vote, the UK remains a strong pillar for innovation in Europe,” said Phil Cox, head of EMEA and president of SVB’s UK branch.

“Despite uncertainty, entrepreneurs and start-ups are forging ahead, creating jobs and raising capital to enhance the UK’s global competitiveness. Whilst one in four will be opening a European outpost – up from one in five in 2017 – slightly more than half of UK start-ups do not plan to expand outside of Britain. Despite challenges relating to regulation, cybersecurity and consumer privacy issues, many UK start-ups are of the opinion that 2018 will be better than 2017.”

Cox said that for UK start-ups, access to talent continues to be their greatest concern, and ongoing Brexit negotiations lead to uncertainty around the future of immigration and international trade. However, he said that efforts are underway to help ensure that start-ups are still able to attract and employ the best talent.

For example, the UK government announced in November that it would be doubling the number of specialist technology visas available to high-skilled workers entering the UK from outside the EU.

“This will be a significant boost to British start-ups that have feared a post-Brexit skills shortage, and underscores that the UK continues to be a strong place to start and grow a business.”

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years