London tech firms say political uncertainty has had a direct effect on their ability to access capital, as venture funding shows sharp drop
The UK’s exit from the European Union is damaging London’s international reputation as a tech capital, as well as on the availability of venture capital and staff, a new poll has found.
Trade body Tech London Advocates found that 87 percent of tech firms felt the Brexit process had tarnished London’s reputation as a business centre, while 39 percent said it had become more difficult to access capital in the City since the referendum.
One in four of the 200 tech executives polled said they had lost out on investment as a direct result of exit from the EU, with start-up EcoSync, for instance, saying a large German venture capital firm had pulled the plug on a £300,000 investment due to uncertainty about the post-Brexit regulatory environment.
Tech London Advocates founder Russ Shaw said Brexit was having a direct effect on the availability of funding in an essential industry.
“It is no surprise that London tech investment fell in 2018 when so many tech companies are experiencing investors deferring decisions until they see some clarity around Brexit,” he said. “One thing is certain – the political situation is harming our fastest-growing industry and making access to capital and talent harder than ever before.”
Many said they felt such problems would become worse due to delays in the process, with 23 percent saying they would prefer things to be resolved quickly.
In general, tech executives were hostile to Brexit, with 70 percent saying they wanted to stay in the European Union and only 15 percent in support of leaving.
London and Partners figures show venture capital funding in London declined to £1.8 billion in 2018 from £2.53bn in 2017, with figures also showing that 48,000 tech positions in the capital remain unfilled, up from 30,000 two years ago.
Shaw said he had found investors in China and the US were “confused” about Brexit, with the process making it more difficult to attract highly skilled staff from the EU and elsewhere.
But the survey found that while Brexit has boosted the tech prospects of Paris, Berlin, Barcelona and other European capitals, 82 respondents predicted London would remain Europe’s tech capital.