UK startups plan for growth despite Brexit uncertainty

Abigail Fenton
·Writer
Banksy Brexit mural in Dover, Kent. Photo: Gareth Fuller/PA Wire/PA Images
Banksy Brexit mural in Dover, Kent. Photo: Gareth Fuller/PA Wire/PA Images

UK tech and other startups are looking to expand despite deep concerns about the post-Brexit economy, according to a new report.

Silicon Valley Bank has released the tenth anniversary edition of its Startup Outlook Report, which surveys 1,400 tech and healthcare founders across the US, UK, China and Canada annually, on their expectations for the year ahead.

The survey found entrepreneurs to be generally pessimistic, with 75% fearing Brexit, regardless of any specific exit plan, will damage the innovation economy. In comparison, only 11% said they believe the post-Brexit environment will have a positive impact on the sector.

READ MORE: Brexit fears hit number of UK startups

The biggest concern for entrepreneurs as Brexit looms ahead is a lack of access to talent, with 81% of startups citing it as the most important public policy issue they face. International trade (45%) and consumer privacy (42%) ranked second and third, respectively.

But despite this, over three fifths (83%) of startups said they have no plans to move their headquarters from the UK, and almost as many (81%) said they plan to expand their workforces in 2019 – underscoring that some optimism still exists despite uncertainty. However, with access to European markets a concern, 28% did say they plan to open a mainland European outpost.

Sadly, just 41% of entrepreneurs said they expect their business conditions to improve this year, compared with 49% in 2018. And 22% said they believe their conditions will worsen – up from just 9% last year.

READ MORE: Ivestment in UK AI startups has increased almost six-fold in five years

In addition, although three in four UK startups surveyed successfully raised capital last year, 75% said the current environment is either somewhat or extremely challenging. Their outlook for raising international capital is also dimming, the report shows, as 44% said they believe access to international capital will be more difficult in 2019.

By a large margin, UK startups said they expect their next source of funding to come from venture capital (50%). The number of companies that said they will rely on organic growth (13%) or pivate equity (10%) is also up from last year.