Today is the day Brexiters have been waiting for ever since a small majority of Brits (51.9%) cast their vote to leave the European Union (EU) last June.
Prime Minister Theresa May notified Donald Tusk, the president of the European Council, of the UK’s departure from the EU at 12:30pm today; triggering Article 50 of the Lisbon Treaty and formally setting the wheels in motion for Brexit.
May’s landmark action, which will spearhead a two-year departure process, is the culmination of months of uncertainty and will undoubtedly be met with varying degrees of acceptance by members of the UK technology industry, a sector largely opposed to Britain’s impending divorce from the EU.
The PM has been outwardly optimistic – some would say unrealistic – about the UK’s future outside of the Union. May recently declared she intended to establish a “new, positive and constructive partnership … by the time the two-year Article 50 has concluded”, but tech entrepreneurs are not overly convinced.
Jumping off a cliff
Francesco Cardoletti, founder of PawSquad, a $2.1m-backed marketplace that connects pet owners to pet care providers, believes the UK government’s approach to Brexit has been strictly political and has failed to consider the economic costs for businesses.
“Triggering Article 50 is the equivalent of jumping off a cliff hoping that your untested parachute will open. It is quite the risky business,” said Cardoletti, stating that the EU had little incentive to offer the UK a good deal.
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Benjamin Southworth, one of the original 3beards and now co-founder of Unicorn Hunt, was just as candid and concerned about the effects Brexit could have on the UK’s prominence as a global technology hub.
“Brexit, in my view, with my beliefs, is a total and utter cluster**ck. The current conservative administration and its parliamentary opposition are utterly unfit for purpose,” Southworth commented.
The entrepreneur, now based in Amsterdam, went on to say Brexit was the “worst self-imposed, unnecessary political catastrophe in living memory”.
Tightening the purse strings
The UK technology sector, reliant on external funding from investors, has previously shown concerns about the way in which Brexit could diminish investment from VCs.
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In fact, recent research released by Tech London Advocates showed at least 26 London-based tech entrepreneurs had experienced investors holding off or withdrawing from a funding round since June’s Brexit referendum.
Nicholas Katz, co-founder of Splittable, an app which enables users to split bills and track expenses, commented on the UK’s departure from the EU and the potential ramifications for SMEs.
“Investors are increasingly turning their focus towards companies that are the least revenue generative and at the most profitable.
“You can’t blame them for this – with less certainty around capital being available from one of the largest backers of UK VC, the EIB (European Investment Bank), UK investors are becoming more risk averse,” he added.
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This reluctance to invest, Katz said, will have a sizeable impact on the success rate of homegrown businesses, as many of these fail due to funding restrictions. But this “creative destruction” could also benefit the community.
“It frees up some of the best talent in the market to go find new homes at companies with slightly more stable footing or join companies earlier to play a more pivotal role in building that idea into a sustainable business,” the co-founder claimed.
Thus far, the UK tech industry has been plagued with uncertainty over how the decision to leave the EU would affect future business operations and access to international talent.
Karen McCormick, chief investment officer at Beringea, was largely positive about the news, suggesting it would help bring Britain a step closer to clarity.
“As Theresa May enters into her negotiations, access to the single market and a guarantee for European citizens to stay in the UK will be high on the priority list for the UK’s tech community.
“The reality though, is that this is a complex process and not everyone will be happy with the outcome – there will be winners and losers. We therefore need to look at what we can be doing as a community to navigate the challenges ahead,” McCormick added.
Kim Nilsson, co-founder and CEO of data science marketplace and training firm Pivigo, said she was determined to remain positive.
Like many entrepreneurs in the space, she said she remained concerned about being able to access skills from abroad, but highlighted the need to be proactive as this was not something that had yet been by guaranteed by the government.
“Continuing the drive to upskill and re-skill professionals in the UK will be essential, but it’s also important to remember that diversity is critical to pushing the boundaries in technology.
“Companies should therefore be looking at business models like freelancing and contracting that are less reliant on geographical borders, to ensure a mix of talent from the UK, Europe and elsewhere,” Nilsson said.
Antoine Baschiera, CEO of Early Metrics, highlighted the need to keep perspective in the coming months.
“The Article 50 triggering means the UK is taking steps to legally exit the EU, but in essence, it does not mean anything else at this point. Triggering the Article 50 does not mean there will be less innovation collaboration for instance – this will only be defined by how negotiations are carried out,” he said.
Regardless of whether they are for or against Brexit, UK technology entrepreneurs should perhaps take solace in the fact that moving forwards with the process is at least a step in the direction of potential long-term stability.
The coming months, however, are set to be challenging for UK firms as a whole and it is therefore necessary that business leaders act rationally, avoid making rash decisions, and wait to see what comes out of the negotiations.