The Brexit threat hanging over startups in the UK tech sector

http://www.theguardian.com/politics/2019/jan/29/the-brexit-threat-hanging-over-startups-in-the-uk-tech-sector

Version 0 of 1.

“We allow cultures to understand each other better,” says Bernhard Niesner, the co-founder and chief executive of a language-learning app called Busuu.

Its HQ is near Old Street tube station, on the edge of east London’s Silicon Roundabout district. About 100 people work at Busuu, helping users learn languages including French, English, Polish, Arabic and Chinese. Defying the usual tech stereotypes, 40% of the staff are women. An array of flags adorns the walls; there is a constant multilingual chatter.

Companies press Brexit panic button in further blow to Theresa May

Busuu, which takes its name from an endangered language spoken in Cameroon, was founded in 2009 and focused on the smartphone boom. For its first three years, the company was based in Madrid, but Niesner, who is Austrian, then took the decision to move to London.

“We thought it was the best place in Europe for a fast-growing startup,” he says. But then he mentions Brexit and his expression darkens. “Britain has tremendous advantages still. But if we don’t get this right, the future will change.”

The fallout from the referendum is already causing Busuu problems. “Right now, if you were, say, a 25-year-old mobile developer living in Spain, I don’t think you would come to the UK,” says Niesner. “There’s so much uncertainty; you don’t really know what your future’s going to look like. Talent acquisition from European countries has really dried out. It’s very hard to get people to come over. Half of our staff are non-British and some of them are thinking about their futures – whether they want to move back, potentially. They don’t necessarily feel welcome any more.”

One French member of staff says: “When this whole Brexit thing started, I felt like an immigrant for the first time.”

Niesner himself has been on the receiving end of Brexit-related hostility: “On the street, I was talking in German on the phone and an old lady, very well dressed, came up to me and said, ‘Speak fucking English.’ I was a bit shocked, to be honest.”

The sense of an international community that is suddenly adjusting to realities it never expected extends across London’s technology startups. The loudest noises from more traditional businesses are about the dangers of a no-deal scenario. But a huge tangle of problems for this growing part of the economy centre on Brexit itself, the cultural signals it sends out and the risk of a brain drain. There are also worries about whether Britain’s exit from the EU will affect crucial access to finance.

This is not just about London, but technology clusters in such cities as Cambridge, Manchester, Newcastle and Dundee. Insiders frequently mention the European cities that are becoming rival hubs, particularly Berlin. And many people talk about aspects of Brexit that have been largely overlooked, such as the digital single market – a set of arrangements, launched in 2015, that aims to cover such areas as data regulation, privacy and copyright. The UK had a big influence on its creation but is now on its way out, leaving many technology businesses with a huge level of uncertainty.

Mike Butcher is one of the key voices in Tech For UK, a campaign group set up “to fight Brexit as a disaster for the UK” and campaign for another referendum. “The tech world is a sort of canary in a coalmine,” he says. “Technology isn’t stopping: people will just up sticks, pack their bags and go wherever they’re most welcome. And the optics of Brexit are not about welcoming. They’re about closing doors.”

Butcher is the co-founder of TechHub, a global business that provides work spaces to startups, and an editor-at-large at TechCrunch, a technology news website.

Before Christmas, he was one of the most visible faces at TechCrunch’s Disrupt, an annual convention for startups and investors that this year took place in Berlin where Brexit was a recurrent conversational subject.

One of the star speakers was Brynne Kennedy, the American boss of Topia, a hugely successful platform that helps people and companies move between countries. She talked about a watershed decision her company made after the referendum when it moved its engineering division – in other words, coders and programmers – from London to Estonia.

“The UK is very near and dear to my heart,” she told her audience. “But … we feel that the opportunity to recruit people in the European Union, particularly on the technical side, is much easier than it is in the UK.” Before June 2016, she said, Topia’s London office received job applications every day, but “that dried up overnight with the Brexit vote”. She paid tribute to Estonia as “a wonderful economy where you can recruit people from all over the world”.

VenueScanner, a platform that enables people to book spaces for meetings and events in UK cities, employs 14 people at its HQ in London, six of whom are from mainland Europe. There are another seven employees in the Polish city of Gdańsk, a set-up made easier by the single market and the fact that VenueScanner does not have to have a formal base in Poland to employ them.

Risk of no-deal Brexit ‘very high’, says key EU negotiator

Rebecca Kelly, its CEO and co-founder, says: “The talent there is incredibly good and there’s incredible value in diversity. The Polish guys are much more direct. They think differently. And the blend of that with the UK has been really good for us.

“Depending on how the laws change, it’s possible that we’ll lose some or all of our Polish team. If we’re unable to hire people unless we have an office formally set up in Poland, things will become a lot more difficult. And the more you lose people, the less attractive you become as a company.”

Conversations with tech insiders in the UK tend to include mentions of people who have suddenly left this country for mainland Europe. One example is Konstanty Sliwowksi, the Poland-born managing director of Caissa Global, a technology industry recruitment company he founded in London in 2009. He has a history and politics degree from Oxford University and a British passport.

Until late 2016, he lived and worked in London, where the company still has an office. Given the European focus of what he does, he says he concluded that at some point he and his family might have to move but, in the wake of the referendum, they quickly relocated to Berlin.

“I’m a naturalised Britain citizen; my wife is German, but born and raised in Hong Kong,” he says. “We always felt very welcome in the UK. And Brexit felt like a slap in the face. What underlined that was the fact that within a month of the referendum, two of my staff were told to go home.”

Four people work at Caissa Global’s London office but things may soon change. “The way things are going now, we’re considering the options for our London headquarters,” he says. “If it’s a hard Brexit, it’s clear to my staff that London’s going to get axed and we are going to be moving to continental Europe.”