More than 80 per cent of the key players in Scotland’s technology scene believe that Britain’s decision to leave the European Union will be bad for business, according to a new survey.
The study by Informatics Ventures, which aims to support tech start-ups by fostering links between industry and academia, also found that 40 per cent of start-up bosses and senior advisers fear Brexit will lead to “significant” challenges in attracting and retaining talent.
Cally Russell, chief executive of personal shopping app Mallzee, said the results of the 23 June referendum had caused a “shock” in Scotland’s start-up community, but added: “I have no doubt that Scottish tech companies are resilient and will continue to create great businesses that are attractive to investors and staff from across Europe.
“In the coming months I think it’s vitally important that everyone connected to early-stage companies continues what they’re doing, shows strong leadership and works even harder to see us through these difficult times.”
Informatics Ventures received 124 responses to its survey, with 81 per cent saying the vote leave the EU was a “bad” decision. A further 10 per cent were undecided, while just 9 per cent thought it was a “good” move.
More than three-quarters of those polled believed there would be a “significant” or “moderate” hit to their ability to raise new investment, with 70 per cent raising fears over sales.
Mobility of labour is very concerning for us, as half our workforce is foreignJohn Peebles
John Peebles, chief executive of Edinburgh-based education start-up, said: “Start-ups really need three things: capital, easy access to workforce, and no distractions from their core mission.
“Leaving the EU puts capital at risk as EU funding will probably dry up and the UK won’t be seen as the natural and logical entry point for North America to the EU. Mobility of labour is very concerning for us, as half our workforce is foreign and the visa process for non-EU people is arduous, expensive, and time consuming.”
He added: “Distractions will occur in the form of questions around free market access, data protection laws, and other legal annoyances.”
Peebles’ comments were echoed by tech sector veteran Ian Ritchie, who said: “Anything that interferes with the ability of talented young people to study in the UK, or that constrains high-quality international researchers from working in our elite universities, could severely damage our ability to invent and develop new innovative technologies.”
Only 22 per cent of those surveyed said Brexit would have no impact on their efforts to attract and retain talent, while 18 per cent predicted their ability to raise new investment would not be affected.
Steve Ewing, programme manager at Informatics Ventures, which organises the annual EIE investor conference, said: “Overall, the results confirm what we were already aware of anecdotally – that the vast majority of Scotland’s start-ups do not want to leave the EU. The vote has created considerable uncertainty, with the potential for significant challenges to attracting and retaining talent and also to raising new investment which is a big issue for start-ups at the best of times.
“Looking closer in, the picture is somewhat more nuanced with most respondents thinking not much will change significantly over the next year or two and some suggesting a weaker pound may help boost exports. As a group, entrepreneurs can be more flexible and less fearful of change – and these initial findings bear out a sense that opportunities may arise from the current situation.”
One anonymous respondent to the survey urged the tech sector to look to the future and “get on with the job”.
They added: “Take on Europe if they are being difficult. Let them take all the immigration problems. We will have the last laugh.”