Startups Back Britain To Remain In EU

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After months of speculation and a much-publicised re-negotiation of terms of membership, last week the U.K. Prime Minister David Cameron formally announced the date for a referendum on whether Britain should remain in the European Union.

The European Union – often referred to as the EU – is an ‘economic and political partnership’ involving 28 European countries. It forms the basis of the “single market,” which enables free trade across member states, including the movement of goods and people, as if the region was a single country.

Should the United Kingdom remain a member of the European Union or leave the European Union?
Related to this, the EU has its own parliament that impacts policy across a wide range of areas, including on the environment, transport, and consumer issues — policies that also have a direct impact on tech startups and larger tech companies.

On Thursday the 23rd of June, British voters will be asked the question: “Should the United Kingdom remain a member of the European Union or leave the European Union?” The vote is being billed by the Prime Minister, who is campaigning to remain, as one of the biggest decisions “in our lifetimes”. Its outcome will also likely have a huge impact on the country’s tech ecosystem and the U.K.’s position as a leading tech hub in Europe and beyond.

To that end, anecdotal evidence would suggest the U.K. tech startup community as a whole — founders, employees and investors — is overwhelmingly in support of Britain remaining a member of the EU. As hard as I’ve tried, I’ve yet been able to find a single bona fide outer, aside from a few undecided VCs. However, the first signs of a more concrete position have emerged in the form of a survey conducted by the Coalition for a Digital Economy (Coadec).

To gauge the opinion of the U.K.’s digital startups (and to inform the lobby group’s own position), Coadec asked startup founders, and people who invest in and work in the U.K.’s digital startups, two questions.

The first, slightly moot, question was whether or not the Prime Minster’s renegotiation of terms impacted their view, with 71% saying it did not impact their view, 29% saying it did.

EU renegotiation

The second, and more crucial question, mirrored that of the upcoming referendum itself — that is whether or not Britain should remain or leave the EU. It found that 81% of respondents said the U.K. should remain a member of the European Union, with 19% saying the U.K. should leave.

EU in/out

Now, admittedly, the survey size wasn’t huge (175, including 126 startup founders, 26 startup employees, 19 investors and 4 others who were excluded) and has obvious limitations — participants were self-selecting and Coadec hasn’t ensured in any way that it’s a representative sample.

However, Guy Levin, Executive Director of Coadec, argues that the results are indicative of U.K. digital startup opinion, and in line with his own anecdotal evidence, which echoes mine.

It’s also in line with surveys from Tech London Advocates (which found that 87% wanted to remain), and from techUK (who found that 71% of members wanted to remain in a reformed EU). So take that as you will.

The issue that comes up most and reason to stay is immigration
Perhaps more interesting is the key issues mentioned by both camps in Coadec’s survey. Those who said the U.K. should remain cited access to a large single market, with harmonised regulations; free movement of labour, giving access to a talented workforce; having a ‘seat at the table’; and stability and security. The outers highlighted the issue of U.K. sovereignty, and over-regulation and red tape.

In the many conversations with startup founders and VCs I’ve had on the EU referendum — including my on-stage interview with Alex Depledge, Hassle co-founder and Chair of Coadec — the issue that comes up most and reason to stay is immigration.

Namely that being in the U.K. makes it easier to recruit technical and other talent from anywhere in the EU, which, in turn, enables startups in Britain to compete globally. The talent pool in the U.K. is simply too small to remain competitive were the public to vote to leave, ending free movement, they say.

And while the “single market” is a long way off from translating to a single digital market, already many startups benefit from harmonised regulation in fintech, for example, which sees a financial services license in one country apply to all 28 member states. That’s a huge deal.

In a statement, Coadec’s Levin says: “The U.K.’s digital startups are clear that they want us to stay in the EU, in order to have access to a single market of 500 million consumers, a talented labour market, and a seat at the table setting the rules. They don’t think the EU is perfect, but have clearly said that the U.K. is better off remaining inside the European Union, than out on our own. The U.K. is the best place in Europe to launch and grow a digital startup, we should not put that at risk.”

He also says the results aren’t surprising, noting that the U.K.’s startup community is “international” in outlook and composition. “Founders come to the U.K. from across Europe (and the world) to launch and grow their businesses. They look to Europe for talented staff to help them grow. And they aim to sell and expand across a trading block of 500 million consumers,” adds Levin.

The BoJo factor

Boris Johnson, the Mayor of London and self-appointed cheerleader for London’s tech startups, declared himself as an ‘outer’
Separately, on Sunday night the Leave campaign recruited one of its most high-profile supporters and one very familiar to the London tech scene. After an avalanche of media speculation, Boris Johnson, the Mayor of London and self-appointed cheerleader for London’s tech startups, declared himself as an ‘outer’. Not only did this send Sterling plummeting, apparently, but it raised more than a few eyebrows within the startup community, many of whom were privately and publicly unimpressed.

One startup founder to go public in his criticism is Tom Adeyoola, founder of virtual fitting room startup Metail. Due to the Mayor’s support for exiting the EU, he is withdrawing Metail from the Mayor of London’s ‘Go to Grow’ programme, which offers mentoring to so-called scale-ups.

In an open letter he writes: “I must respectfully make it known that I can no longer support or be part of the Mayor’s ‘Go to Grow’ International Export Programme. An export programme without a pro-European stance doesn’t work for me, and I firmly believe that leaving the EU would be fundamentally detrimental to Metail’s export future and growth prospects.”

Meanwhile, another known and public supporter of the U.K. remaining in the EU is London-based venture capitalist Eileen Burbidge. That’s particularly noteworthy given that, along with numerous government advisory roles, she’s a tech ambassador for the Mayor of London, a position that has seen her share a number of platforms and trade missions with Johnson.

I asked Burbidge what she made of the Mayor’s decision to back the Leave campaign and she had this to say: “Like everyone else in Britain the Mayor is right to carefully consider his view on the situation but I do have a different point of view and strongly believe Britain (and the U.K. tech sector) is better off within the EU”.