When my co-founder (also husband) Joe White and I sold our technology business, Moonfruit, in 2011 we made an active choice to remain in the UK to invest in its technology and business ecosystem – both with our time and capital. It determined our choice of acquirer, Yell Group, who had headquarters in London and Seattle. We wanted to give back to the UK, especially as I am a child of south-east Asian immigrants, grateful for the opportunity the UK had provided for them and their family. Joe is a child of Kiwi and Cornish(!) immigrants who feel the same. We also felt that the UK, within Europe, was the right place for our children to grow up. The freedom for them to travel, study, work and set up businesses across Europe would give them the opportunity to explore in a rapidly shrinking, globalising world.
I sit here today and hope we have not made the wrong decision. Tech City data shows the digital sector in the UK is growing over 32% faster than the wider economy, and is creating jobs 2.8 times faster, too. The estimated turnover of UK digital tech industries reached £161bn in 2014. The UK’s rise over the past five years has been nothing short of meteoric. Our internet economy, as a percentage of GDP, continues to lead the G20. The truth is that the digital sector will eventually just be subsumed into being the business sector, as every company and organisation will be enabled by technology in some form – from web, mobile and Wi-Fi today to the internet of things, artificial intelligence, voice and virtual reality in the future. In fact, 41% of digital tech economy jobs exist in what are thought of as traditionally non-digital industries – such as the public sector and financial services.
But this economy is hungry for talent and skilled resources. Brexit potentially throttles this growth in three ways. First, demand already outstrips the supply of skilled digital talent in the UK. Talent is needed in both businesses and academia. The digital tech industries are creating employment opportunities and accounting for 1.56m jobs across the UK. At Entrepreneur First, we joined Matt Clifford and Alice Bentinck to build the next generation of deep tech companies pushing the boundaries of AI, virtual reality, space, and computer vision. We have a £40m fund we invest to support these companies. Every one of these is incorporated in the UK. So far they have created £535m of value. They employ staff and sell services, both of which contribute to UK tax revenue. We train 200 individuals a year and turn them into 40 companies. 50% are UK citizens, 25% are EU non-UK, and 25% are recruited from the rest of the world. Our arms are open to EU talent. But, in the future, what will this mean in terms of time line and visas?
Second, Brexit may stall international funding. Last year saw a record high for investment in UK startups of $3.6bn. European funding to the UK would be at risk if we are not part of the EU. Investment activity backed by the European Investment Fund represented 41% of total investments in Europe in 2014. The EIF has anchored several of the largest UK tech venture capital funds, who have reported that the EIF are cautious to commit until there is a clearer roadmap for Brexit.
Finally, being out of the EU might reduce market opportunities for UK companies, with fewer customers and more complex regulation to trade. We hope that our 2011 decision was not the wrong one but we will fight to keep the UK as a digital world leader by investing in talent, innovating with universities and engaging with government.
Wendy Tan White is general partner at Entrepreneur First
