Could London’s ‘Silicon Roundabout’ be about to short-circuit in the wake of the Brexit vote?
The landmark, known formally as Old Street Roundabout, is considered the beating heart of the UK capital’s thriving start-up scene, with hundreds of young businesses located in the vicinity, writes Ben Flanagan.
But following Britain’s historic June 23 vote to leave the European Union, some believe that the inbound traffic of technology businesses could be reversed, driving them to other locations such as Berlin, Dublin – or even Dubai. Brexit, they say, could spell a ‘techxit’.
Yet others have brushed aside such fears, pointing to the strong ongoing investments in London’s high-tech sector as evidence the start-ups are here to stay.
The latter, unsurprisingly, is the line held by London & Partners, the UK capital’s official promotional company.
British tech firms have attracted an impressive $200m of venture capital funding across 42 deals since the referendum, London & Partners said in July, sourcing data from venture capital database PitchBook between June 24 and July 22.
Leading global investment firms “have committed to continue investing in the UK’s tech sector” despite the vote to leave the European Union, with 253 venture capital firms currently present in the capital, London & Partners said in a statement.
Robin Klein, a partner at the London-based seed fund LocalGlobe, said he expects London to keep its status as a tech hub.
“I’m an entrepreneur and professional optimist and still super positive about London and the UK,” he was quoted as saying.
“The UK is one of the world’s largest economies and we have been trading with the world and especially Europe for nearly 1000 years — the relationships are deeper than the last 24 years of integration show and I’m confident that they will mostly remain strong.”
Others such as the UK Lebanon Tech Hub – a Beirut-based start-up accelerator launched in April 2015 by Banque du Liban and the UK government, and which later opened a workspace in London’s ‘Tech City’ – said it does not expect trade relations between the UK and Europe to change overnight.
“The UK Lebanon Tech Hub remains committed to helping Lebanese tech start-ups gain access to international markets and go global through our UK accelerator programme whilst remaining in Lebanon and creating wealth and employment there. We opened an office in the heart of London’s Tech City and we will continue to use this as a springboard to help a new generation of Lebanese tech stars access the best support, networks, universities and exhibitions across Europe and the world,” a spokesperson told Benchmark.
“London will remain a global city at the heart of the global technology value chain. New opportunities will arise as the UK considers new trade relations in the world not least by recognising the growing appeal of emerging markets including the Middle East.”
Yet others are not so positive.
Askar Sheibani, the chief executive of the UK-headquartered IT and telecoms support firm Comtek, said Britain’s departure from the European Union marks a “devastating blow” to UK businesses, especially those in the tech sector.
“Words cannot describe how disappointed I am that the British public turned its back on the EU; choosing years of economic uncertainty over being part of a thriving economy that has helped Britain to progress phenomenally in terms of trade, competition, employment and skills,” he told Information-Age.com.
“Many companies based in the EU will be looking to attract agile UK-based firms, such as those in the technology industry. With the advantages of a single market across the water and possibly a weakening UK economy at home, it will be no surprise that some firms seriously consider a shift in focus, potentially turning Techxit into a reality.”
But Robert Siegel, lecturer in Management at Stanford Graduate School of Business and partner at XSeed Capital, said it was too early to say what the full impact of the Brexit will be.
“It’s certainly a possibility that a London outside the EU might lose some of its lustre as elements of the self-reinforcing halo effect of the established ecosystem are diminished,” he told TechCityNews.com.
“On the one hand, founders of new startups may think twice about moving to London, or may even not bother leaving stable jobs and ‘starting up’ at all; on the other, startups already embedded in the capital may not be equipped to uproot themselves and move to the continent… But ultimately it is far too soon to say. There is, however, another area in which a discernible impact on the UK’s tech startups is already being felt, anecdotally at least: the availability of investment capital.”
And whether that continues could be the clincher for whether London does indeed lose its crown as the dominant European start-up hub.
Other cities such as Dublin, Berlin, Amsterdam and Stockholm are considered as being in line to the throne should that happen.
But some have even pointed out that Dubai could be a good new home for London-based start-up talent should a ‘techxit’ ensue.
Dany Farha, co-founder and chief executive of the Dubai-based venture firm BECO Capital, implored “Brexit talent” to come to Dubai.
“If the divorce proceedings post Brexit are going to be as quick and aggressive as the rhetoric suggests, we in MENA, particularly Dubai with its modern infrastructure, business-friendly attitude and welcoming nature to expats, should seize the moment,” he wrote in a blog post.
“We need to work with our governments to identify the type of technology talent that we need to attract to our region and provide special tech visas and other fast track and subsidies to attract this talent.”
Two of the biggest potential post-Brexit problems that London-based start-ups face are attracting talent and market access, Mr Farha said. But Dubai, he added, is open for business.
“We don’t know how [Brexit] is going to turn out. But there’s no doubt that Frankfurt is going to target the City of London, and Berlin is going to target Shoreditch or the Silicon Roundabout,” he said in an interview. “And I don’t think it’s in a bad way. But I think Dubai should definitely play a role in attracting talent to our region.”
And so if London’s ‘Silicon Roundabout’ does indeed have a meltdown, it seems there are plenty of other global cities willing to seize an electrifying opportunity.