UK start-ups are already feeling the Brexit pinch, as they claim that the European Union has already pulled the plug on funding the UK’s tech sector. Although no official line has been released by the EU, a number of technology firms have revealed that their funding is being slashed by the EU as the UK prepares to leave the Union (for better, or worse).
Before the vote to Leave last June, the European Investment Fund provided more than half a billion pounds into the British industry. However, tech startups claims that since the vote the money has dried up and instead Brussels is distributing larger sums to companies based in France and Germany.
Rory Stirling, a partner in BGF Ventures, told The Times: “While they’re not saying ‘no’ officially, the clear message is that they are closed for business. They are doing eternal due diligence.”
Business data provider Dealroom said Britain was being outpaced by France in venture fundraising during the first half of the year, while Germany almost matched the UK in new investments over the same period. The report showed that French venture houses raised £1.7 billion during the first six months of 2017 – more than triple what compared to the same period last year. That compares with £1.6 billion for their British-based counterparts, whose fundraising efforts declined by around 50 per cent compared to the first half of 2016.
The figures come amid reports that technology startups are looking outside of London to keep costs down. Manchester is fast becoming a technology hub, with more and more firms opting to relocate to the northwest city. The city’s thriving tech sector now accounts for nearly half of all enquiries for city centre office space. According to Colliers International around 40 per cent of new enquiries are coming from the tech industry.
The success of Manchester is representative of a growing trend in the UK, which is seeing a number of cities outside of London emerging as tech leaders. Smaller cities across the UK are fueling technology innovation in niche areas such as manufacturing, virtual reality and IoT production. London is still the UK’s technology hub, according to the fifth UK Tech Innovation Index compiled by the Open Data Institute and the Digital Catapult organisation. However areas outside the capital are showing signs of growth.
The survey, which takes in data from 36 of the largest UK cities across seven disciplines – IoT, artificial intelligence (AI), VR, data, health, creative and manufacturing – found that while London, Edinburgh, Manchester, Brighton and Southampton are the top five cities for data innovation, Reading and Liverpool are leaders in the internet of things (IoT).