UK start-up scene post-Brexit? A lawyer, an innovator, an analyst, an investor and an entrepreneur weigh in
The EU Referendum dominated our first post-Brexit Music TechPitch 4.5, but the high calibre and inventiveness of the start-ups who pitched showcased a healthy UK tech scene that continues to disrupt and innovate.
Held on 6 July 2016 at Runway East in London, the usual pre-pitch keynote speech was replaced with the judges discussing how Brexit might affect the UK start-up, music and tech scene.
“Brexit is going to have an impact on music and tech whether we like it or not,” said event chair Ashley Elsdon of PalmSounds.
Judge Tom Frederikse, a partner at Clintons law firm with a long, varied career in law, music and tech, said that while – from a legal perspective – there wouldn’t be any changes to copyright and IP law that impact start-ups, economic and commercial uncertainty would dominate.
“The UK has the best government incentives [for start-up and business growth] anywhere in the world, such as SEIS, but they might now be even more focused on the UK,” he said.
He advised that UK start-ups consider looking for funding from other countries, especially the US. “If you’re looking to raise money, the US dollar now goes a lot further.”
“Test the validity of your idea with investors”
Emma Obanye, who recently exited her TechPitch 4.5 winning start-up Buddy Bounce, echoed our observations about economic uncertainty being an opportunity for start-ups to truly test the validity of their idea.
“I always think start-ups should work to get their idea validated by investors first and foremost, and this climate will force that,” she said. “And it’s an opportunity for start-ups to hone in on their business model and make sure what they’ve got is viable.”
She also expressed concern over the future of government initiatives such as SEIS and Capital Enterprise. “As an entrepreneur, government initiatives like SEIS really help people get their idea out there,” she said. “Institutions like Capital Enterprise definitely helped us on our journey and non-profits having funding cut by the Treasury doesn’t bode well.”
The Brexit impact on start-up investment
Elsdon asked fellow judge Xaver Matt, founder of digital marketing agency NetLeadz and an angel investor, what impact Brexit might have on investment.
“The biggest problem will be that three to four years of uncertainty may make the UK lose focus,” he said. “Start-ups and investors need focus – if they don’t they lose their way.”
But Matt strongly endorsed the notion that a good business idea was a good business idea, no matter what the climate. “If I come across a good business idea and model that especially works well in the UK, I’ll invest in it,” he said.
Harry Botterill, Head of Technology Acquisition and Open Innovation for Hasbro, was positive about the current state of technology and innovation in the UK, but also expressed concern over what years of uncertainty might do to the ecosystem.
“[At Hasbro] we source innovation globally and being based in the UK with the amount of tech-based start-ups around is amazing,” he said. “My concern is that the uncertainty of the next two- three years as we renegotiate [trade deals] will stop investment and will ultimately affect the amount of development and the great work that’s been done in the UK up until this point.”
He was also concerned with how a loss of EU funding to UK universities would affect the UK’s role in future innovation.
“We work with a lot of a universities that have good robotics departments that are financed by the EU,” he said. “We have a direct concern about sourcing talent in the UK.”
The Berlin exodus?
Elsdon asked the panel for their view on persistent mumblings that Berlin could replace the UK as the tech centre for Europe.
“My friends in the start-up community are already brought into the idea of the digital nomad,” Obanye said. “For example, with the company I’m working with now, we are planning to go to Thailand for three months to keep costs low. But, yes, I think people will be looking for other places to get their start-up off the ground in a drive to keep costs down.”
For information about the start-ups who pitched at Music TechPitch 4.5, as well as a profile of the winners and runners-up, please check back on the 4.5 Blog in the coming days. To apply to pitch at TechPitch 4.5 or to buy tickets for our next even on 12 July 2016, please visit our website.