The London Startup Tech Scene: Post Brexit
The recent decision to leave the EU has many people worried. Rival cities could benefit from the UK’s choice.
In the first half of this year, if you had asked anyone in Europe where the continent’s tech and startup capital was, they would undoubtedly have said London. The mega city’s appeal to the tech world lies in its competitive economy and focus on fintech, English language and proximity to the finance and creative industries that tech often collaborates with. In addition, a hyper diverse and entrepreneurial spirit jibes with the startup world’s ethos as a progressive and outward facing industry.
Brexit Changes the View
However, since the United Kingdom voted to leave the EU on June 23rd’s referendum, a major shadow of doubt has been cast on that once commonly-held assumption that London was Europe’s tech headquarters. One of the biggest reasons for this is the single market. London’s prior place in the EU meant that it had access to one of the single most valuable markets in the world, making it a perfect place for a company’s headquarters and easing issues like regulation across borders. Another major reason is the pool of talent from which tech firms can draw. As Taavet Hinrikus, the chief executive of one of London’s most successful fintech startups, TransferWise, said to The Guardian.
“This is likely to affect regulation and the movement of talent, two massive issues for business. The two main benefits of being part of the EU are access to talent because of the free movement of labor and the fact that you can ‘passport’ regulation so if you’re regulated in the UK, you’re regulated across the EU. We don’t know what’s going to happen with either of those.”
Economic Growth: Or Potential Lack Thereof
After the result of the vote, Hinrikus was quoted as saying that the decision would affect the company’s decisions to grow the London office further, a decision that’s sure to be mirrored by other major tech firms.
“It’s unlikely we will close our London office,” he now says. “but we will probably not grow the team based here much more. Headquartering elsewhere is a possibility but we haven’t made a final decision yet.”
That said, Brexit negotiations will stretch for months, if not years, and insiders are still unsure about whether the single market and free movement option is still on the table for the UK. If those remain, it’s possible that startup culture in London can still thrive. If they do not, a new European city is likely to take over as the continent’s tech HQ. Here is a look at some contenders.
Berlin
Berlin senator Cornelia Yzer has been publicly lobbying hard for London’s fintech startups to relocate to the German city. With much lower rents and a population that largely speaks English, it wouldn’t be a difficult switch for some. The International Business Times reported that more than 100 startups are said to be eyeing the move.
Paris
A close London competitor throughout history, surely Paris would love nothing more than to add a few of London’s success stories to its already burgeoning startup scene. Already full of corporations that are useful to for startups to be adjacent to, the one potential setback is language, as French still reigns supreme in Paris.
Helsinki
With a high income base, lots of potential investment, and a fintech sector that’s already active, the Finnish capital could pose a great alternative. Though it doesn’t have a ton of well-known startups already, there’s nothing stopping it from gaining a few
Stockholm
Already home to big tech success like Skype and Spotify, the Scandinavian city presents an attractive option. The city already is getting 18% of fintech investments in Europe as a whole, so it would appear to provide a seamless transition for fintech firms eyeing a move.