By most measures the UK’s tech sector is flying, with a range of startups quickly scaling up thanks for a steady flow of investor cash.
AI, fintech and 5G development are booming areas in the UK, however newer businesses in more niche areas still struggle to get funding from UK-based investors, and the B word isn't helping.
Research from Tech London Advocates (TLA) found that 39% of tech companies have since found it harder to access capital in London as a result of Brexit.
“Going forward, with the UK getting ready to leave the European Union, we’ve also seen over the past few years that we probably have our biggest issue now around talent. Do we have enough talent to support the growth of the sector? And more critically for me, can we build much greater diversity in our tech sector in terms of bringing more women and minority groups in," Russ Shaw, founder at London Tech Advocates tells Techworld.
“How do we keep the immigration pipeline open while we leave the EU, and how do we nurture and develop more home-grown talent? I think if I look at London and the UK, it’s grown from strength to strength over the past six years, but we do have some big challenges on the horizon."
Global tech advocates is made up of 13 networks around the world, including London, which was the first to launch in 2013. Shaw explains that significant changes have happened in the UK tech scene since the launch, but the uproar of Brexit brings a cause for concern.
“It’s certainly matured in many different ways. When I launched the group the word fintech didn’t exist, we weren’t talking about AI and machine learning, healthtech, retail tech or deep tech. So, what happened over these past six years is that we’ve started to see startups scaling and scale-ups becoming unicorns,” he says.
Speaking at TLA’s investor showcase 2.0, a number of investors did raise concerns about the lack of interest from UK investors.
“It’s particularly evident in fintech where you’re not quite sure what the rules are going to be if and when we exit the EU, but if you’re talking about core technology, frankly it’s all about talent and we still have the best universities in Europe," Anne Glover, CEO and co-founder at Amadeus Capital said on stage.
“It’s bureaucratic but we get that. We’re not seeing a big problem, but nevertheless it doesn’t mean that I don’t think headwinds could be coming,” she added.
According to TLA’s founder, there are enough investment pools across London and the UK to fund upcoming businesses but businesses also have their part to play when it comes to keeping up to speed with other countries in the roll-out of new tech.
"The angel funds may be stepping back a little bit, which may not have an immediate impact, but could have an impact in a year or three years down the road," Shaw said. "So we have to watch that carefully, and my hypothesis is that it is Brexit driven and until we get clarity around what Brexit looks like, we might have some pulling back from angels and early stage investors because that’s the riskiest part of investment."
For its part Tech London Advocates will continue to support investors and startups, to SME businesses in growing the ecosystem. With the launch of TLA venture capital working groups, it will work with VC firm Beringea to help more companies raise funds from UK investors despite Brexit.