Move on from Brexit – why relocating is a good move for startups

06. July 2016

It’s the hot topic at the moment: Brexit. Since June 23rd, when the Brits voted to leave the EU, there has been both political and economic turmoil. While there is a power struggle on the island to determine who will succeed David Cameron as prime minister, UK-based companies are now voicing their thoughts about moving to EU countries. Brexit will bring about serious changes for startups as well. Without access to the European single market and without freedom of movement for international workers, startups face economic disadvantages. etventure and Friendsfactory are helping startups to move to large startup cities in Germany such as Berlin, Munich, Stuttgart and Hamburg. At the same time, they are offering these startups the perfect ecosystem, which will help them to quickly find their feet in a new location.

UK in political chaos

Less than two weeks ago, the UK took the decision to turn its back on the EU. Since it became clear that the Brexit campaigners really did prevail, the situation in the UK has been exceptional. Just hours after the vote, Prime Minister David Cameron announced he would step down. The battle over who will succeed him is now in full swing. Yet it is not the ringleaders of the Brexit campaign who are now taking responsibility and negotiating the conditions of the UK’s exit from the EU. Boris Johnson, who spearheaded the Leave campaign, stepped back last week and this was followed by the resignation of UKIP leader and vehement Brexit advocate Nigel Farage two days ago. “Quit when the going gets tough” proclaims the headline of an article on the Spiegel Online website. The article (in German) comments: “Farage and Johnson have caused the chaos but they do not want to be the people to remedy it. Now that the two crowd-pullers of the movement have stepped back, it now falls to others to oversee or lead the difficult negotiations on the domestic front and in Brussels.”

Exclusion from the European single market, no more free movement for workers and no more EU funding

But the possible economic consequences and their immediate negative implications weigh much more heavily on UK-based companies than the political power struggles and antics. As soon as the outcome of the vote was announced, the pound fell to a historic low and it has not recovered since. Banks and companies such as Vodafone, Goldman Sachs, Lloyds, Siemens and Ryanair have already announced that they will be moving jobs to other countries in Europe or scaling back investment in the UK. UK-based startups are also facing the question of how to proceed in the wake of Brexit. The startup scene in London is dependent on being international and there is a high level of dependency on EU initiatives and funding.

Even just being excluded from the European single market will make it significantly more difficult for many startups to do business abroad. The fintech scene in London is coming under particular pressure. This is because it it will become harder work and more expensive to fulfill EU rules in future, British fintechs will be at a disadvantage compared to competitors from the EU. What’s more, the staff teams at startups are often international. By leaving the EU and ending freedom of movement for workers, there is a sudden lack of clarity about whether foreign workers will be given permission to stay or whether they will have to leave the country. It is also likely to become more difficult for startups in the UK to attract new, talented staff. This has been mentioned in press articles such as the deutsche startups website. It comments (in German) as follows: “One of the crucial consequences for the economy in general and for London-based startups will be that finding talented professionals will become more difficult. Up until now, London has been a melting pot of international, young top executives. In future, it is expected that the recruitment of international talents will require a great deal of effort.”

etventure offers relocation service

Admittedly, it is currently not clear what effect that Brexit will actually have on companies and startups. But this doesn’t make the situation any better. Quite the opposite is true. Politically, there is a risk that things will be left hanging, with long-winded negotiations dragging on for years and years. “Considering the volume and complexity of legal and factual issues, it would be dangerous for companies to simply wait until negotiations have been completed,” writes business publication Manager Magazin (in German). This applies all the more to startups. They do not have the financial safeguards that enable them to wait until the negotiations have finished before responding. So it is hardly surprising that numerous startups are thinking about moving to EU countries. For many, even just the notion of quick access to the huge European common market with minimal red tape is enough of an incentive for relocation.

etventure is an established player in the European startup ecosystem. As a company builder, etventure has already built numerous startups of its own. Together with Friendsfactory’s expertise in the area of real estate and in developing innovative office solutions, we can also offer startups from the British Isles support with finding the right location for their business. At the same time, we offer them access to our network of founders, VCs and large corporations.

And it is worth considering places other than Berlin, which is already tipped as being the big Brexit winner. Germany’s capital city already has a vibrant startup scene and is attractive because the cost of living is relatively low. But Munich, Stuttgart and Hamburg also have their advantages – for example the close proximity to big business and investors, as well as highly qualified workers. Here at etventure, we want to help startups from the UK to relocate and get the ball rolling. With the slogan “Move on from Brexit,” we help startup teams to find their ideal location and suitable office facilities in Germany. Such facilities include our offices and co-working spaces, for example. Because we have many years of experience as a company builder, we know exactly what young startup teams need and we can help with legal and administrative queries. What’s more, we can act as advisors and experts when it comes to linguistic and cultural barriers. Contact us!

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Doris Bärtle ist PR Managerin bei etventure. Zuvor arbeitete sie im Bereich Unternehmens- und Markenkommunikation und im Event Management.

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