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London tech start-ups hit by lack of funding after Brexit vote

Published 01/07/2016

Tech start-up companies in London are already feeling the impact of Brexit
Tech start-up companies in London are already feeling the impact of Brexit

London-based tech start-ups are starting to see funding dry up in the wake of the EU referendum result, with many now considering plans to ditch the capital altogether.

Netz, which provides data to financial companies, saw five investors suspend hundreds of thousands of pounds in promised money within 24 hours of the vote.

The firm also faces the risk of not being able to tap enough talent as Britain's departure from the EU could make it more difficult to hire from the bloc's other 27 countries.

"The people we want to hire, are they still interested in coming to London? There is a lot of uncertainty from a regulatory point of view," said German boss Frank Bertele. Since the vote, he has accelerated plans to expand into the US.

The tech sector is particularly dependent on accessing talent easily. A 2015-survey by Wayra found that one third of employees in tech startups in Britain are from outside the country, and one in five comes from another EU nation.

Duedil, a financial technology start-up, has doubled its staff every year for the past five years, with 20% coming from other EU countries. It is growing too quickly to have the luxury of waiting for Britain's relationship with the EU to be clarified over coming months.

As a result, it has drafted a plan for a European office. It will decide in the next few weeks whether that will be in Dublin, Berlin or another European city.

"If it hadn't been for Brexit, we would probably have hired more people in London," said Damian Kimmelman, chief executive of Duedil.

The concerns about the potential effect of Brexit come as the UK tech industry is already experiencing a talent shortage. Job search engine Adzuna shows there are around 35,000 open software positions in London.

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