How Brexit will eventually turn out for the UK economy seems to be anyone’s guess right now and the next few years, while the dust settles and new trade partnerships are established will inevitably hold their challenges. However, one UK industry that hasn’t seen any ill effects to date, quite the opposite rather, is the UK’s technology sector. British-based companies at the forefront of developing the latest technology in the world today have seen the amount of investment they receive from Silicon Valley see a more than twofold increase since the Brexit vote.
Over the course of 2016, which covers the run-up to the Brexit vote and immediate aftermath, new UK tech companies were the recipients of £342 million in funding from Silicon Valley-based investors. In contrast, the first 9 months of 2017 saw investment to the tune of £884.4 million pour into the coffers. The figures come from London & Partners, the Mayor of London’s promotional agency for business in the capital, where much of the tech industry is centred.
British tech start-ups have long been at the cutting edge of developing the latest technology in the world, though Silicon Valley, home to many of the U.S. tech giants and the hub of the start-up scene across the Atlantic, is the established world leader. At a time when many young companies focusing on innovation are concerned about the loss of investment capital that comes from the European Investment Fund after Brexit is completed, this strong evidence of strengthening ties with the U.S. comes as a huge boost.
The UK’s tech industry is currently the darling of Silicon Valley’s money men who have spent £2.1 billion supporting the best concepts and products coming out of it over the past 5 years. That’s more than double the U.S. tech investment into Sweden, the country that has attracted the second highest level of funds from Silicon Valley. Sweden’s figures have also been bloated by a handful of larger deals while investment into UK companies shows a much more consistent pattern.
It is thought that Brexit has led to increased enthusiasm in the UK as a recipient for investment rather than Silicon Valley being scared off by uncertainty. Tensions between U.S. tech giants and EU regulators have flared on several occasions in recent years, centred around competition law and taxation. Google was recently hit with a £2.1 billion US fine for breaking competition law and Apple informed it must cough up a giddy €13 billion of unpaid taxes due to Ireland.
Silicon Valley Comes to the UK spokesperson Sherry Coutu stated that a strong bond between Silicon Valley and investment in the UK’s tech start-up industry is “more important than ever” following Brexit. She also believes the relationship is of mutual interest with British companies solving different problems and working with and developing different technologies compared to their counterparts in Silicon Valley.
It’s not only big venture capital vehicles that can invest in the best UK tech start-ups. The UK government’s SEIS and EIS schemes mean private investors who invest in fund raising rounds can take advantage of attractive tax breaks. These offset a significant portion of the risk that investing in early stage technology companies inherently comes with.
“They have different technologies and are solving slightly different problems, when venture capitalists come over they have an awakening about what’s possible,” she said.