Tech entrepreneurs and investors are bouncing back from the impact of the vote to leave the EU with a recent survey finding that the digital community’s confidence has recovered sharply since the June 2016 referendum.
In the lead up to the release of the Tech Nation 2017 report coming out later this year, Tech City UK polled 2,732 businesses in the digital and tech communities and discovered that almost half the respondents (49%) expected the business environment to get better in 2017. The results represent a dramatic improvement on the tech sector’s confidence in the days immediately after the referendum, when a similar poll by Tech City UK found that 8% of the community expected things to get better.
The latest poll of business sentiment from the tech community finds that the initial shock felt by the sector, which had lobbied hard for the UK to remain in Europe, has largely faded. In a shift in opinion, almost half of respondents now expect things to get better this year and only 5% of people expect the business environment to get a lot worse, compared to 42% in June. Back in June 2016, 74% of tech businesses thought that things would worsen, but only 24% now expect them to deteriorate.
Four in ten of those questioned by Tech City UK identified themselves as founders or chief executives of tech or digital companies and the improvement in confidence among CEOs and founders in the sector is encouraging. Immediately after the Brexit vote, 12% of founders thought things would get better and 72% that it would get worse. In the latest poll, 46% of founders now think things will get better with just 26% thinking things will worsen.
The survey also found that sentiment had improved amongst those in the London tech community – which stood to lose the most from Brexit, as it relies heavily on EU workers, founders and investors. Almost a third of London’s digital community (35%) now expect things to improve, compared to 6% in June.
Gerard Grech, CEO of Tech City UK, said: “We have conducted the largest ever survey of the UK digital community and at the start of 2017 it is encouraging to find the mood becoming increasingly positive. This reflects the resilience and underlying strength of our digital sector, which continues to grow and create jobs at a far faster rate than the wider economy.”
Here’s what investors and founders in the Tech City UK network had to say:
Simon Calver, partner at BGF Ventures:
“The year just passed was one of shocks and surprises but the economy overall has held up remarkably well. For the tech sector, however, the power to transform lives has not disappeared because the country voted to leave Europe. We have to seize the opportunities that are out there now. In the UK we still have highly skilled tech talents that are pushing the boundaries of innovation with things like artificial intelligence and machine learning. At BGF Ventures we invest only in UK businesses and we intend to be very active in 2017, seeking out companies and entrepreneurs that can change industries and lives for the better.”
Ahmed Badr, Head of Legal at GoCardless:
“As a startup, we are naturally adaptable and keen to rise to a challenge. While the details are not yet set in stone, it’s clear that Brexit will pose a number of interesting issues for fintech companies and the wider financial services sector; not least those arising from whether UK-based firms will retain EU passporting rights. We are confident that we can solve for these issues, ensuring continued service for our existing European customers and further European expansion. Ultimately, our ambition is to simplify Direct Debit and bank-to-bank payments globally, so we are always thinking beyond Europe. We’re hiring for lots of positions right now and are not seeing any decline in interest in working here.”
Suranga Chandratillake, partner at Balderton Capital:
“From an investor perspective Brexit has unleashed uncertainty and challenges, particularly in areas like securing skilled people. But there comes a point where you have to embrace the uncertainty and look for opportunities in the turbulence. If businesses are under pressure they will be keen to cut costs and streamline operations, to find new ways of doing things more efficiently. This is exactly what the most successful tech businesses are great at doing.”
Julia Fowler, co-founder of Edited:
“People say business hates uncertainty, but nothing is certain in life. Starting my company felt natural to me because the industry I was in was changing so completely. Risk opens up opportunities, and I believe there are many more opportunities ahead.”
Doug Munro, founder of Adzuna:
“We started our business here in the UK because it was the best place to find the skills we needed, the investment we hoped to secure and the opportunity to build a business to match our ambitions. As we enter 2017 we see hard work and challenges ahead of us, but we know that we can continue to make a success of it.”
Aron Gelbard, founder of Bloom & Wild:
“I gave up my job in business consulting to start Bloom & Wild. I did this because I sincerely thought I could build a team of passionate people who would be able to use technology to create the first flower gifting company that the public would truly love. There’s still just as strong a need for flower gifting in spite of Brexit and my team and I are more passionate than ever about making every flower gifting experience the joy that it should be. We know there’s a lot of uncertainty, but we’re also confident that we can act faster than larger companies if things do change, so see uncertainty and change as an opportunity to grow, rather than something to be afraid of.”
The UK tech and digital sectors received strong endorsements from US tech giants in the months after the Brexit poll, with Apple committing to its £9bn London HQ project; Google announcing plans to hire 3,000 more people across the UK and Facebook unveiling plans to create 500 new UK jobs in 2017. IBM also said it planned to open four new UK data centres.
Just before Christmas, British tech unicorn (valued over $1bn) Just Eat bought its UK rival Hungryhouse in a £200m deal, while Tech City UK has seen a surge in applications for the digital technology specialist Tech Nation visa since the referendum, making 2016 a record year for visa applications and endorsements.
The British tech sector’s confidence follows a second half of 2016 in which several UK tech businesses – notably Arm Holdings and Skyscanner – were bought by overseas investors, representing the strength and talent in the industry, as well as the opportunities created by the weakness of sterling.
Tech City UK conducted 2,732 interviews with members of the UK digital community over the period 15th November to 6th December 2017. Four in ten of those questioned by Tech City UK in this latest survey identified themselves as founders or chief executives of tech or digital companies. Immediately following the 23 June referendum, Tech City UK polled over 1,200 members of the UK tech community.
Tech City UK’s Tech Nation 2016 report calculates that there are 1.56 million jobs in the digital tech economy – 41% of which are in traditionally non-digital industries. The value of the digital tech economy is estimated at £161 billion and the sector is growing almost three times faster than the wider economy.