A TechPitch 4.5 alum is leaving the UK, but could Brexit be good news for aspiring entrepreneurs?
When DueDil, a company that provides a multi-point data platform for company information, pitched at the first ever TechPitch 4.5 back in 2011, the UK had broken through the clouds of the 2009 recession. Over the past five years, as the UK economy has boomed and investment reached an all-time high, DueDil grew to more than 100 employees, with plans hire many more.
“We’ll be distributing our team, opening up new offices in Europe rather than focusing on the U.K.,” DueDil founder Daniel Kimmelman told Bloomberg.
DueDil’s change of plans speaks to a larger epidemic of UK growth becoming stagnant. Throughout the country, for small and large companies alike, Bloomberg reports that “hiring is being cancelled or moved overseas, investments terminated and expansions shelved.” DueDil is just one of many, and the stories of UK companies making similar plans to relocate – as well as European companies reconsidering whether they should enter the UK market – are currently flooding our newsfeeds.
Beyond the single market
We reported last week that the UK must continue to innovate, despite uncertainty over Brexit. Writing in The Conversation, finance academic Mark Humphrey-Jenner has argued that despite uncertainties over the UK’s access to the EU’s single market, there are still benefits and advantages for startups remaining or even relocating to the UK.
“The UK does have some advantages for startups, including largely effective regulatory agencies and relatively modern contract and commercial law,” he writes.
Meanwhile, Chancellor George Osborne announced this week that he would be cutting corporation tax to encourage businesses “to continue investing in the UK following the EU referendum vote.” It would make the UK “the lowest corporation tax of any major economy,” said BBC News, although there were wide-spread political and economic criticisms of the move. Osborne has claimed the UK is still “open for business,” but it’s easy to see how businesses – particularly startups – are skeptical of this claim.
The Brexit opportunity for startups
With so much uncertainty, where is the silver lining for startups?
In several places, actually.
1. Investment is still there
While Brexit may have marked the end of an investment heyday in the UK, this doesn’t mean all investment has dried up. Indeed, as the pound loses value against other currencies and interest rates remain virtually non-existent, investors and angels will be looking for other places to put their money and get a return on investment. London in particular is still teeming with angels, investors, and crowd-funding alternatives, as well as opportunities to meet them and present your business plan.
(Remember: the pitch (and the business plan behind it) is everything. Read our pitch advice for start-ups post-Brexit at the bottom of this post.)
2. Recessions can be good for innovation
The UK is not in a recession (although many believe it is just a matter of time), but post-Brexit definitely feels like one. However, recessions can prove fertile ground for innovative and disruptive ideas. “Recessions create problems,” wrote Forbes during a period of uncertainty in the US economy in 2013. “Consumers and businesses are looking for solutions to [these] problems, which presents opportunities for startups to solve.”
3. You can start as you mean to go on
Learn how to run your business without excess capital and you will set up an efficient working practice that will see you through uncertainty and beyond.
“A startup built during the tough times is designed from the ground up to be a lean, mean, efficiency machine – whether you’ve bootstrapped or not,” wrote Forbes. “These habits should stay with you when the market recovers, giving you higher profit margins since you’ll be able to lift prices once consumers and clients are spending again.”
4. Take the time to research and network
In an investment heyday, it can be tempting to dive in for fear of missing out. A downturn is a chance to take your time. Use the opportunity to do your research and find like-minded individuals. Go to networking events for start-ups, where you will hear what other ideas are in progress and meet other aspiring entrepreneurs, as well as potential partners and employees.
5. Find the best employees
A downturn means a job market saturated with qualified individuals looking for work. Job fairs are a great place to present your startup to the working world. Remember to know what you’re looking for and be firm about what you can offer for remuneration, though.