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What Brexit means for start-up investment in the UK (there’s even good news!)

What does Brexit mean for you, your business, and your opportunities for funding?

Oh, Brexit.  You have made life here in the UK – shall we say – interesting.

Ever since the UK voted by hair’s breadth majority to leave the European Union, uncertainty has prevailed. Even the most seasoned of seen-it-all politicians, bankers and analysts are struggling to provide more than just guess work as to what the impact – both long and short term – will be. And no wonder – this is brand new territory and the terrain will not be mapped for some time. But what if you’re an entrepreneur with a fledgling start-up? What does Brexit mean for you, your business, and your opportunities for funding?

Since the government committed to triggering Article 50 by the end of March 2017, it’s been tempting to sit and wait out whatever fallout ensues. But fear not. Despite pervasive unpredictability since that fateful day last June, there has been an equal balance of good and bad news.

 

The bad news

Despite initial good news in the six months after the referendum, there has been a reduction in start-up funding across all sectors. Fintech has been particularly hard-hit, with investment dropping by a third according to research by Innovate Finance. Overall, deal numbers dropped by 18% and investment by 12% according to data from Beauhurst.

 

A European exodus?

According to the Independent, one in five UK start-ups is considering establishing a European outpost in the wake of last year’s Brexit vote, with some already planning to move headquarters out of the UK. Look more closely at the fine print, and such moves are motivated by concerns about the fate of non-British employees and worries about venture capital opportunities.

 

Keeping your day job

Entrepreneurs have always known that kickstarting a business means burning some midnight oil, but as more investors want start-ups to at least have a MVP before committing to funding, it means more entrepreneurs will be doing the hard graft while holding down their 9-to-5. And that isn’t easy.

 

The good news

IW Capital research shows that 44% of investors think Brexit will have a positive impact on their investment. ‘Transition brings opportunity,’ commented Luke Davis, CEO of IW Capital to startups.co.uk. “There is clearly a huge amount of confidence towards the country’s entrepreneurial capabilities, its resolute private companies and the potential of our innovative high-growth businesses to drive economic growth in 2017.”

 

UK start-ups investment happens daily

Want encouragement? Read TechCityNews’ investment page, every day. (That’s right, every day.) It’s the best source for which start-ups are getting funding, and from where. Last week alone eight funding announcements were made, spanning fintech, proptech, smart batteries, cybersecurity and DaaS.

 

Crowdfunding will save the day

Beauhurst believes that crowdfunding is “emerging as a real alternative for funding later-stage companies”, and many crowdfunding companies have recorded double-digit percentage growth in funding. BDaily writes that the private sector generally is predicted to pick up more of the funding slack. In addition to crowdfunding, angels, peer-to-peer lending and ‘structured products’ are expected to surge.

 

Finally, don’t dismay…

A good idea is still a good idea, no matter what the economics of the time. So know where the funding is concentrated, and master the basics of making your start-up stand out amongst the crowd: define the specific problem you’re solving and the market you’re addressing; have a clear revenue, business and go-to-market plan; and know what you want from investors while being clear on what they can expect in return. These principles will see you on the road to success, Brexit or not.

 

Are you in an ambitious UK startup that's optimistic about the future? Read more about how to raise funding with us.

 

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