Will the UK lose global reputation following EU referendum result?

Will the UK lose global reputation following EU referendum result?

A momentous event took place last week in the UK. While on paper it was only supposed to be a vote that concerned the UK, it could have (and is already having) a far reaching impact on the wider European community and ecosystem. The UK voted by the tiniest of majorities (4 percent) to leave the European Union, in what was ultimately a vote about immigration and populist nationalism.

So what does this now mean for the UK? Is the rhetoric of ‘we don’t want immigrants’ from the leave campaigners mark the end of London’s rise as an emerging and dominant tech cluster to rival Silicon Valley, by being closed to a wider talent pool? Will the potential break-up of the UK that ensues also have an impact (there’s already talk about Scotland and the Northern Ireland wanting independence from the UK so they can stay in the EU, since the majority of their respective populations voted to stay in the EU)?

Well there may still some constitutional hoops to go through for UK parliament to actually pass the bill to press the button on Article 50, which invokes the process of leaving within a two-year timeframe. But this supposedly will not be actioned until a new Prime Minister comes in to replace David Cameron, expected in September, since Mr. Cameron probably doesn’t want to go down in history as being the person pressed the button that broke up the UK and the EU.

Nevertheless, the UK’s tech entrepreneur ecosystem has given a strong reaction, of both resilience and the need to continue to embrace the EU, in whatever relationship is likely to result. Rohan Silva, an entrepreneur but previously the architect of UK government’s ‘Tech City’ PR campaign, said in an open letter from the UK tech community, “Entrepreneurs are fundamentally optimistic about the future — they always roll up their sleeves and make the best of the moment (however difficult), and that will undoubtedly be the case now.”

Russ Shaw, who heads up Tech London Advocates, the voice of London’s tech ecosystem, expressed his disappointment to Management Today, saying, “‘Today’s result is not what the London tech sector wanted to see, but we will continue our efforts to build London tech and continue on our journey to make London a world-leading tech hub.”

One of the UK’s more prominent corporate accelerators also put out a strong statement following the referendum result. Gary Stewart, director of Wayra UK & Telefonica Open Future (UK), said, “We really didn’t see that coming. 72 hours later, and it still feels like we’re only beginning to regain consciousness after being knocked out by Friday’s unexpected Brexit vote, and it appears that the hits will keep on coming.”

He adds, “Just last Thursday, Wayra UK had hosted an event on corporate acceleration where Neelies Kroes, the former vice president of the European Commission, had captivated an audience of 200 entrepreneurs and innovators with her remembrances of post-WWII Europe, her explanation of the war’s impact on the EU’s origins and her insistence on the importance of Great Britain’s continued membership in it. Most of our audience appeared to be in agreement with Neelie. In an informal secret ballot taken before her fireside chat with Sherry Coutu, the overwhelming majority had declared that they’d vote to remain.”

Seismic macroeconomic and political factors

“As entrepreneurs, start-up life is risky and uncertain enough; few entrepreneurs that we know had expressed much appetite for increasing their daily dose of uncertainty by disturbing the seismic macroeconomic and political factors that would be unleashed by Brexit.”

He offered some rational explanation for the way the vote had turned out, and some comment on the demographics. “Perhaps what surprised us most from the social media and political pundit analyses of the vote is the extent to which many people that live outside of urban capitals view themselves as victims of diversity and/or globalization. We hadn’t previously given much thought to this alternative worldview, given that Wayra UK is the British branch of an accelerator funded by a Spanish multinational. We celebrate diversity and globalisation, as they are at the core of our very being, and in the digital universe in which we operate, borders are imaginary and unnecessary limitations on human potential and aspiration.”

He adds, “When we conducted our Start-up DNA research last year to investigate the demographic makeup of the UK entrepreneurial ecosystem, we found that 20.7% of the UK’s start-up population is from the European Union. We also found that in many instances, the UK’s start-up scene is more diverse than rival ecosystems such as Silicon Valley, New York City and Tel Aviv. What’s more, diversity is seen as a positive good by over 70% of the start-ups in our study, which declared that it helped make their companies more competitive and helped them find new markets.”

“The Brexit vote was a wake-up call that we must change this sense of despair before it gets too late, and we believe that entrepreneurship – and the entrepreneurial ecosystem more generally—have an important role to play here. Talent isn’t limited by geography but sometimes opportunity is. We will work to change this and will double down in our efforts to work with local councils throughout the UK to democratise entrepreneurship and return hope to members of these communities that don’t feel the same benefits of diversity and globalisation that we do.”

Summing up the sentiment, several entrepreneurs are quoted at the end of the Wayra statement, but two here seem to demonstrate both the worry and the resilience of the UK ecosystem.

Elodie Draperi (France), co-founder, GiveVision, says, “The UK’s choice to exit the EU is particularly significant. Half of our team is from European countries, and we as a company chose to operate from the United Kingdom. We are concerned about many things at personal and professional levels such as access to talent, being able to find candidates in the future and the ability to collaborate and benefit from European startup initiatives.”

Tatiana Livesey (Moldavia), co-founder, Winerist, says, “The decision to leave the EU was a massive shock and is a massive blow to the London tech community. The London startup hub was already competing heavily in Europe with the likes of Berlin, Milan and Barcelona in terms of investor money and talent acquisition. After Brexit, nobody knows what the policies and laws will pan out to be for the next decade.”

Importance of people and talent

Since immigration was the key issue aroused by the leave campaigners, stoking up all kinds of fears among nationalists, the tech ecosystem has been keen to distance itself from this message.

Pat Saini, head of immigration at law firm Penningtons Manches, and a chair of the Immigration and Talent Working Group of Tech London Advocates, was keen to get a message to the international tech talent community. She said, “Following the Brexit vote, whilst the sector remains strong we have been informed of concerns about investment levels, investor uncertainty and what this means for London’s global reputation, but the most pressing issue is around people and talent. European founders, entrepreneurs and employees are worried what impact public opinion and visa changes will have on them.”

“It is vital that the sector sends a clear message to European and international members of London’s tech community to show them that their impressive contributions are valued and that they are a crucial part of this growth of the sector.” Her firm outlines the implications for the tech sector here on its web site.

In conclusion, while the populist nationalist sentiment has swung the vote in favor of the UK leaving the EU and some elements of the British Government and other leave campaigners want to close the doors to overseas talent, the UK tech community looks like it is prepared to do everything it can to maintain its position in the global tech ecosystem, and keep London up there as one of the top emerging tech clusters outside Silicon Valley.

[Image source: City of London government web site]

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A momentous event took place last week in the UK. While on paper it was only supposed to be a vote that concerned the UK, it could have (and is already having) a far reaching impact on the wider European community and ecosystem. The UK voted by the tiniest of majorities (4 percent) to leave…
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