brexit

WWhen we started putting Learngrowth together the Brexit vote hadn’t yet happened. Since 1980 the number of small businesses in the UK has risen from 700000, to 5.4 million businesses by 2016- creating more than 15 000 000 jobs

So what does the future hold for startups in the UK now that we have chosen to leave the EU?

It's not all doom and gloom

Startup loans and the government’s New Enterprise Allowance scheme have certainly helped create a healthy startup culture in the UK. Now, post the Brexit vote, the future for UK plc and startups appears somewhat less certain. Berlin has surpassed London as the place for venture capital to flow to and the Germans are making attempts to lure more talent to their startup communities there. France is doing the same. Time then for some concerted action from the UK government to ensure that startups are well supported in the post-Brexit environment.

Still a good place to base your business

Despite Berlin and other European cities seeking to attract startups, the UK is still an appealing place to start a business. The recent devaluation of the pound means that our startups seeking investment represent good value for foreign investors.

Assessing the risk related to buying into or launching a startup in the UK requires a more considered approach. Post-Brexit regulations are likely to be as conducive as possible for startups. Without the dynamism of a healthy startup culture it is hard to see how the initial disadvantages of Brexit are to be minimised. The startup entrepreneur has to believe that government will deregulate, maintain loans for startups and do all it can to galvanise the SME sector to pick up momentum and compensate for the initial setback that Brexit will inevitably cause.

The risk of high tariffs means that certain business models involving import and export are likely to find it tougher. At least so warns Richard Branson in a recent article in Forbes. We find ourselves in a situation where the pound is trading at all time low levels and yet a recent report for CB Insight and KPMG for Venture Pulse showed trust levels in British startups improving. In the 3rd quarter of 2016 UK startups raised $834m. That said, the real impact is likely to been seen in 2017 once Brexit negotiations begin in earnest.

We shouldn’t worry about the slowdown in the creation of unicorn startups. Just how realistic is a valuation of $1bn or more for a new business anyway? Post Brexit UK will need to be pragmatic, and hard work will need to be put in by all to build a truly sustainable business culture. There are interesting times ahead but for those who keep their cool, Brexit presents a wealth of opportunities.

We'll explore some of these Brexit business opportunities in a future post.

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Startuptuition is powered by Learngrowth Ltd, a company registered in England and Wales under company no. 10556194.

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