Could even be true

Up to a quarter of London’s tech start-ups may not survive a no-deal Brexit, according to new research which heaps fresh pressure on the Government to finalise a trade agreement with Brussels.

A survey conducted by Tech London Advocates, the industry lobby group, found that thousands of start-ups were on the brink of administration, and concerned about the dual threat of a no-deal Brexit and the fallout from the Covid-19 pandemic.

For we’d rather expect a quarter of all start ups to be on the brink of administration at any one point in time. That’s rather the nature of the beast.

13 thoughts on “Could even be true”

  1. So just how many start-ups get involved straightaway in international trade? How likely is it that start-ups are going to form part of that 8% of UK trade that goes to the EU? Will Project Fear never end?

  2. Bloke in North Dorset

    There’s a lot of assertions in that piece and very little evidence.

    Around three quarters of tech companies said they expected to find it significantly harder to raise capital in future if Britain failed to agree a trade deal with Europe right now.

    I presume they think because we can’t ever trade with the EU. That’s just plain daft, it might be a bit harder but then ignores the rest of the world.

    Among tech leaders, one of the biggest concerns over a no-deal scenario is access to international talent, with around 60pc of those surveyed by Tech London Advocates voicing fears skilled data scientists and software engineers may be tougher to find.

    How many are from the EU? And when I looked at the immigration requires the likes of data scientists and software engineers were fairly high up on the list of getting a free pass. Rather than restricting the market its opened it up to the RoW.

  3. Diogenes,

    “So just how many start-ups get involved straightaway in international trade? How likely is it that start-ups are going to form part of that 8% of UK trade that goes to the EU? Will Project Fear never end?”

    Quite a lot, but the first thing you do is to aim for the Anglosphere. There’s no geographical friction. There’s not a whole lot of costs of turning a UK-based web application into one for the Americans and the Australians. Some legal and currency stuff, and you’re there, and you hit a market of 300+m people.

    Europe? You’ve got to get German and French staff to reply to emails, translate every page (which is ongoing). If you get big enough, it’s fine, but you don’t do that at a startup level.

    And if you’re running a startup in London, you’re an idiot. There’s talent all over the country rather than pissing money away in rent.

  4. And when I looked at the immigration requires the likes of data scientists and software engineers were fairly high up on the list of getting a free pass. Rather than restricting the market its opened it up to the RoW.

    It already is. You might be surprised at how many public sector ICT outsourcing contracts involve imported Indian techies. Most of them completely incompetent, because plagiarism, nepotism and cheating is rampant in Indian academia.

    God forbid we allow supply and demand curves to ever work in favour of British workers, eh?

  5. Bloke in North Dorset,

    “How many are from the EU? And when I looked at the immigration requires the likes of data scientists and software engineers were fairly high up on the list of getting a free pass. Rather than restricting the market its opened it up to the RoW.”

    I don’t know about data scientists. There’s a decent smattering of East Europeans in software teams. I’ve worked with quite a few Poles and Latvians. But I rarely work with someone from western Europe. The people from France or Germany I work with are mostly here because they married someone in the UK, not because they came for the work.

    I work with far more Indians than anyone else, though. It’s not even close. If you took a photo of most software teams I work in, you’d think someone was deliberately making it diverse. It’s normal for me to be in a software team and 1 in 3 or 4 is Indian.

  6. Steve,

    Totally different experience to me. Indian techies I’ve worked with are pretty good. Just behind the yanks and the Vietnamese. Then again, I mostly do private sector work.

    Worst people are mainland western Europeans. Biggest bunch of entitled, malingering clock watchers around. Americans, Vietnamese and Indians hit deadlines. If they’re behind, they put in the hours and deliver. Europeans are like “I’ve done my hours”.

  7. ‘according to new research which heaps fresh pressure on the Government’

    Modern journalism. Telegraph finds story which supports the TELEGRAPH’S agenda. Telegraph heaps fresh pressure. At least tries to. Cirrusly, after 4+ years, whose mind are they going to change?

  8. Suspect the difference between Steve and bom4 is that bom4 is looking at people individually hired into (presumably mostly UK-based) teams whereas Steve is talking about large-scale outsourcing of IT to large Indian consultancies, many of whom send staff to the UK on short rotations. Such services being known to compete more on price than quality.

    So although they apparently contradict, both Steve and bom4’s anecdotes ring true to me and both reflect what I’ve heard from other people in IT.

  9. Something I gleaned from someone involved in the start-up side of tech (particularly the fintech scene which is disproportionately London-based for obvious reasons) is that yes, Startupland does have particular concerns about Brexit that are different to other sectors of IT. Main rival to London in this area is Berlin.

    Yes lots of Europeans and especially East Europeans in startups. But all the posters above talking about visas being relatively easy for IT roles and a global market for such labour are missing some points about how the startup scene works. As Timmy says it’s a rapid turnover of firms. By the time you’ve done all the visa paperwork, the firm might not even exist anymore. Startups dislike anything that slows them down. A Berlin startup puts up a job, anyone in the EU can apply, no hassle. The London equivalent no-hassle catchment, post Brexit, is going to be far more limited, largely (in the short term) to the pool of staff who are already in London and which is anticipated to be depleted in the years after Brexit.

    Why? The flip side is, for the staff, why go thousands of miles to set yourself up in a new city for a job that has little security and the firm could collapse within weeks? Almost nobody would do that. So why do so many young (often East European) developers work in the startup scene in London and Berlin? Because it is a scene. They get their name and face around (which is why geographic concentration is important and even expensive cities work well as “clusters”), and without even changing the lease on their appartment they can bounce about from one startup to another until (hopefully) they find one that takes off, (less hopefully) they get bored but use their experience to bag a more conventionally careerist type job at an established firm, or (rarer but best of all, both for individual and their host country, if it works out) they found a startup of their own. In fact disproportionately many founders are skilled migrant workers so this is a group that London/Berlin/Paris/others are keen to attract.

    At present someone moving to London to work at a startup is often moving for the startup scene in general as much as for that particular post. The wider scene is their insurance and their job security, and also something they’re often keen to explore (especially if they’re entrepreneurial). A visa based on a particular post being a skills-shortage position is no good for these people, even if firms could be bothered to do the paperwork. Those EU migrants already in London will have a right to stay but people don’t stay in Startupland forever so their numbers will deplete over time if there aren’t schemes to allow fresh blood in. There has been a push from people in the startup space for visas that allow such skilled staff to apply for a visa based on time (eg renewable every five years) rather than being limited to a particular post, but personally I haven’t seen a serious and low-bureaucracy suggestion for how to stop this kind of visa being abused to work in a slightly different area to what was intended – perhaps economically there’s no need for that and I’m sure a few people on this site would be okay with a system where all jobs with sufficiently high income are open to anyone globally, but politically it’s probably a necessity to make the idea a goer. Also note that startup salaries are often below equivalent jobs elsewhere since a major attraction is an early equity stake, whose valuation is something like a lottery ticket.

    This is largely paraphrasing someone else who did seem to have genuine concerns about the long-term sustainability of the London startup scene post-Brexit. Apologies if I haven’t conveyed it totally accurately but I reckon it gives the gist of his argument and I did see others from the sector supporting his sentiment.

  10. I’ve met a number of Western European professional women who moved to London in their 30s. The story always goes that they were bored with their jobs, then a British recruiter contacted them via LinkedIn, and they leapt at the opportunity.

    I suspect the truth is that being a single woman with money in her 30s in Aachen or Aix-la-Chapelle or Aquisgrana isn’t nearly as much fun or as socially acceptable as being single and 30+ in London.

  11. God forbid we allow supply and demand curves to ever work in favour of British workers, eh?

    Next you’ll be expecting the US Secretary of Defense to put America first.

  12. My millennial son reports some social upheaval amongst his fellow millennials. To wit, Covid shocks single women, especially, that if they get Covid, they have no where to go and no one to help them.

    It seems a healthy society enables independence. And a pandemic suggests independence isn’t such a good idea.

  13. Fair assessment, A quarter of UK start-ups wouldn’t survive a stiff breeze. That’s the point though isn’t it? High risk, high reward. Disruption and all that. Whatever we think of Brexit, start-ups are supposed to be nimble and take advantage of change, not to require the state to operate in a way as to guarantee their success and protect them from competition.

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