The UK tech industry is largely terrified by the risk of a “Brexit” — Britain voting to leave the European Union in the upcoming referendum.
Surveys show tech workers are overwhelmingly opposed to the idea, and none of Britain’s tech “unicorn” startups worth more than $1 billion openly support it. “It’s the first political issue of my lifetime I’ve felt this strongly about,” one London CEO told me last month.
But not everyone has such an apocalyptic outlook on Britain exiting the 28-nation bloc.
Fergal Mullen, general partner at European venture capital firm Highland Europe, says Brexit will have absolutely no impact on how his firm does business.
“I personally think it would be a shame, almost sad,” the Irish-born investor told Business Insider. “Because what’s the best thing the EU has achieved in the past 40 years? It’s peace. And that was one of the founding principles of the EU for the first place … You guys brought peace to Europe when we needed it most, so I would be sad.”
But, he continued, “I think it would have the kind of economic impact that people think. People will still create companies here — that’s not going to change. People will come and go here, in the non-tech world people will still want to have second homes or first homes here, that’s all going to continue.”
Highland Europe focuses on growth-stage investment in internet, software, and mobile companies, typically investing between $10-30 million in a company each time. It launched in 2012, and has €580 million (£444 million, or $652 million) under management across two funds.
“Yeah, you might have to negotiate some bilateral trade deals and so forth,” Fergal said. “And yeah Europe will probably give you a hard time for a while. But you know what, I think you’ve got some pretty clever trade negotiators and bureaucrats. They will figure it all out.”
The financial industry has a gloomy forecast for a post-Brexit Britain.
This is in stark contrast to some other European investors — and most of the financial sector. The IMF, the World Bank, the European Central Bank, JPMorgan, and Blackrock are among the financial organisations that have come out against Brexit, warning of adverse economic consequences.
“In the event of a ‘leave’ vote, we could find ourselves with a considerably less rich and diverse startup ecosystem, where we no longer attract the best entrepreneurs to start up, and from the investor perspective, with reduced dealflow,” wrote early stage venture capital investor Nic Brisbourne in an op-ed for Tech.eu. He asked rhetorically: “And equally, would Brexit also make it harder for UK investors to invest across Europe, thus limiting the flow of UK capital into EU startups?”
And Haakon Overli, founder of VC fund Dawn, wrote for The Telegraph that “it may be a decade or more before venture capitalists considering investing in the UK have any clarity over what environment they will be operating within. That would spell disaster for UK businesses looking for risk capital for two main reasons.”
But Mullen disagrees with this assessment, and says it won’t change the growth-stage VC firm’s investment strategy.
“If you think about it, the only material impact could be on the value of the pound versus the Euro and … if we’re trying to get a return from a foreign exhcange perspective on our entry price versus our exit price on the foreign exchange movement that happened in between, then it’s probably not a great investment in the first place.”
“You’ve already Brexited.”
Mullen thinks the risks of Brexit are overstated because Britain is already much closer to a post-Brexit state than people realise. “You’re already Brexited,” he argues. “The UK is already an island nation. You’ve got your own currency. You’ve got a central bank that allows you to control your currency. You’ve cut a better deal with Europe about a year ago in anticipation of this particular referendum.
As such, Britain’s existence outside of the EU won’t be as unfamiliar as many fear: “I think you’ve already established many of the conditions that people think will exist post-Brexit. I think they already exist. You guys have negotiated this over the last few years.”
In short: Life will go on.
Britain’s tech scene is fiercely international, and there are fears that leaving the European Union will make it harder for British startups to hire and retain European talent because of the end of free movement. But Mullen doesn’t buy this argument either. “If you need to get talent, you’re going to get talent,” he argues.
Who to let in, post-Brexit, won’t be an EU decision: “That’s a UK decision, and will remain the UK decision. There’s no way even if you Brexited … I don’t see the UK ever changing its policies on allowing quality people into this country. They won’t! And that’s who they’re recruiting. It’s high-quality graduates.”
He added: “I think the UK is no dumb country. And I think if collectively you decide to leave, is it a disaster? No! I think it’s sad. It’s not a disaster though, and I think you’ll adapt.”
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