Tech entrepreneurs in London are losing out on funding amid the continued uncertainty surrounding Brexit, according to a damning new study.
Research by the membership group Tech London Advocates (TLA) found that 23 per cent of entrepreneurs had seen investors defer investment decisions as a result of the ongoing political crisis.
The survey of 200 high profile entrepreneurs also revealed that 39 per cent were finding it harder to access capital and 60 per cent were struggling to make international hires as the UK prepares to leave the EU.
The findings come after it emerged that venture capital deals in the UK had fallen by 57 per cent in the first three months of the year. Some 161 deals were signed in the first quarter, down from 300 over the same period in 2018.
The total amount of venture capital raised by British startups also fell from £3.12bn in 2017 to £2.49bn last year. Over the same period, investment in French firms rose from £748m to more than £1bn. President Emmanuel Macron has attempted to position Paris as a contender for London’s tech crown after Brexit.
“It is no surprise that London tech investment fell in 2018 when so many tech companies are experiencing investors deferring decisions until they see some clarity around Brexit,” said TLA founder Russ Shaw. “One thing is certain – the political situation is harming our fastest growing industry and making access to capital and talent harder than ever before.”
He added: “It is incumbent on the private sector to provide leadership in such uncertain times, to celebrate the strength and success of the industry to continue attracting investment and to work together as a community to address the challenges we face.”
Brexit is predicted to hit job growth in the digital technologies sector harder than in any other sector of the economy, according to a forecast published by the Mayor of London’s office last year. A total of 32,000 digital technology jobs will be lost by 2030 if the UK leaves the EU on World Trade Organisation terms without a transition period, researchers estimate.
Softer Brexit scenarios are also likely to strike the digital technologies sector hardest. When researchers compared growth rates based on continued membership of the single market and customs unions with a departure from the latter but not the former, employment was forecast to be 1.3 per cent lower by 2030.