As if a global pandemic wasn’t bad enough, after four and a half years, Brexit is coming into full effect, bringing with it a wave of changes that has many individuals and businesses feeling a little bit lost.
The decision of the United Kingdom to leave the EU has raised many-a-question for tech companies on how Britain’s departure will change how they do business. This confusing period has many entrepreneurs, investors, and CEOs in the space scratching their heads as to what the UK’s flourishing tech sector will look like post-Brexit.
We’ve researched the most common assumptions around the topic of Brexit’s potential impacts on technology start-ups, and followed them up with research-led answers.
Will Brexit lead to higher costs of imports and exports?
Technology startups should expect to experience rising costs in imports and exports post-Brexit.
Not only will there be the increase in costs, but the onset of Brexit means Business owners, including those in the technology sector, will need to face a lot more rules and regulations… and paperwork. For instance, when importing, businesses will need to obtain an EORI number to import goods into England, Wales, and Scotland.
The same also goes for exporting. Your technology startup will now need to check rules and restrictions regarding the goods you are exporting in the destination country. You may need to purchase extra licences and certificates for certain items. You can read more information on this here.
Will it be more difficult to attract skilled overseas talent post-Brexit?
Another concern regarding post-Brexit world centres around the loss of skilled key talent from the EU. There seems to be the nagging concern among technology leaders that highly-skilled and highly-sought-after professionals may want to look at other, more permanent places of employment if the UK was to only offer short-term working visas. Worryingly, shortly after the Brexit referendum, government data showed that a significant number of EU nationals began leaving the Kingdom, with the trend accelerating as the deadline approached.
According to recent research by Tech London Advocates – an independent network of over 9,000 tech leaders, experts and investors – around 60% of the tech leaders who participated feared losing access to skilled international talent, as reported by Computer Weekly.
It’s not all doom and gloom on the tech recruitment front though; Tech Nation Visa has since been designated by the Home Office to endorse applications for the Global Talent Visa in digital technology and can begin to accept applications from tech talent and their families from the EU, for up to five years.
Will funding become more challenging to obtain?
A common concern from many tech entrepreneurs is the belief that funding may be more difficult to win in a post-Brexit world. Even before Brexit came into place, investing funding saw a decline as a result of the referendum decision. According to Beauhurst, a UK investment-tracking company, early-stage funding for UK startups dropped by 15 percent in 2018, fuelling worry amongst tech startups surrounding the impact of Brexit.
Having said that, fast-forward a year, and we witnessed venture capital investment into UK tech companies hit a record high, with over US $13.2bn of funding won, shaking off fears that Brexit would reduce outside investor’s appetites.
Despite concerns around funding, it’s important to remind ourselves that the reason the UK has become the powerful hub of innovation it is today is due to it being relatively easy and practical for tech businesses to secure funding here. The region is bustling with burgeoning incubators and accelerators who have long been supporting tech entrepreneurs turn their great idea into a booming business with access to finance, mentoring and that all-important tech network.
Will dealing with personal data from the EU change?
Brexit may impact how your technology startup uses personal data from outside the UK.
Government guidelines regarding the handling of personal data received from the EU state that a bridging mechanism has been agreed that “allows the continued free flow of personal data from the EU/EEA to the UK after the transition period until adequacy decisions come into effect, for up to 6 months.” This suggests that for now, rules will remain the same regarding personal data, while of course adhering to GDPR practices.
However, the UK Government also recommends that during this bridging mechanism, businesses, including technology startups, should work with the EU organisations of whom you may receive data from to “put in place alternative transfer mechanisms to safeguard against any interruption to the free flow of EU to UK personal data.” More information on international data transfers post-Brexit can be found on the ICO website.
It’s not the easiest period for business owners at the moment, with both the murky waters of Covid-19 implications and Brexit to navigate. The political, economic, social and trade implications of Brexit is likely to impact planning for your technology startup for the next decade. However, there’s no need to feel overwhelmed or lost, as there are plenty of resources and support out there to help you make sense of a post-Brexit space, including Gov.UK and Tech Nation’s Brexit readiness guide.
Despite the questions surrounding Brexit and its impact on technology businesses, there’s currently so much to be celebrated in the world of tech. For one thing, the UK are only behind the US and China when it comes to the number of tech unicorns produced – with Bristol playing a key role in this. Adding to this is the finding that compared to the rest of the UK economy, digital tech grew six times faster than any other industry in 2019, and this shows no real sign of slowing down. And so, let’s head into 2021 focusing on the many opportunities waiting for us!