The potential impact and consequences of Brexit on the startup companies

In spite of the ongoing global financial turmoil and economic challenges faced by Europe, for years, the business environment of the United Kingdom remained not only stable but also positive, forward-looking and open for business. For the last few decades, the UK government has shown commitment to supporting new businesses, which accounted for a private-sector-led economic recovery. As of now, the UK is the world’s sixth-biggest economy and ranks high among the world’s top manufacturers (OECD, 2019). Among other metrics, it is worth a mention that the UK ranks second among the world’s largest services exporter, with the US being the absolute leader. Besides, the Western European country is the world’s sixth-largest trading nation (OECD, 2019). The ease of doing business is what makes the UK the most attractive place in Europe for overseas companies to base their headquarters. Statistically, the UK has more European headquarters than France and Germany combined. As for starting new businesses, the UK is recognised as the best place to set up and run a business in Europe. As stated in a report by the World Bank, on average, it takes 13 days to start a company as compared to the OECD (Organization for Economic Co-Operation and Development) average of 15 days. Amid the European countries, this metric has yet to be outperformed. Among the most fargoing initiatives by the UK government is the introduction of the startup visa in 2011. The new type of visa served as a replacement for the Tier 1 Graduate Entrepreneur visa program. To attract foreign startupers, the UK expanded the eligibility criteria beyond the EU, the European Economic Area and Switzerland. The visa applies to those who would like to set up a business in the UK that has the potential of being endorsed by an authorised body. The latter may include a UK higher education institution or a business organisation with a history of supporting UK entrepreneurs (House of Commons Library, 2018). The startup visa is reserved for business in early stages and unlike the Innovation visa, does not require investments. Due to the aforementioned changes in legislation and economic ties, each year, the UK seems to be witnessing one record after another. For instance, between 2015 and 2017, the number of new, UK-based businesses has risen from 608,000 to 660,000, proving that the West European country remained unrivaled as a place for starting a company. Moreover, disruptive startups has become the key for the rapid economic growth (House of Commons Library, 2018). The nature of disruption is introducing a product or a service that sets a new bar for the entire field and compels other industries to keep up - or be left behind. In the case of the UK, it has already seen such products whose founders chose this particular country for their headquarters. Last.fm and its more well-known successor, Spotify, has changed the world of online music streaming. The new milestone that the UK is now attempting to pass is to encourage more students and recent graduates to start businesses. As per most recent statistics, each year, disruptive startups contribute as much as 196 billion pounds to the UK economy. Yet, only 5% of university students and graduates to pursue the entrepreneurial path (House of Commons Library, 2018). The government acknowledges that more often than not, young people give up on a dream of having their own businesses due to the overwhelming need to find financial stability. It is argued that new startups are being held back at the seed stage due to the lack of funding sources. At that, traditional funding methods seem not to be making the cut. Thus, the overall trend on the UK startup market is a search for new, innovative funding models. As of now, the government intends to test on-campus funding that would allow students to receive business loans on behalf of the government. The program is now operating in several universities across the UK. Another viable alternative that has been gaining popularity is crowdfunding and crowdsourcing. Lastly, young startupers many of whom are not done with their studies yet choose Lean Startup model. They aim at creating an MVP - minimum viable product - to attract the first customers and establish a customer base. Experts from a large tech startups, SeedLegals, have outlined some more startup trends that are bound to shape the market in the years to come. First, UK startups no longer need to accumulate a large amount of money in investments and/ or group investors in order to be launched. Instead, the trend is that businesses fundraise continuously from their existing professional network even though it means receiving smaller sums of money each time. Further, the UK is witnessing an evolution in startup advising. Namely, receiving business and legal recommendations is no longer limited to specific institutions that require application and approval. Knowledge regarding startups becomes democratised and available online. Lastly, as SeedLegals report, deal terms benefit founders more than ever while previously, investors had the last say in the game.

Experts from a large tech startups, SeedLegals, have outlined some more startup trends that are bound to shape the market in the years to come. First, UK startups no longer need to accumulate a large amount of money in investments and/ or group investors in order to be launched. Instead, the trend is that businesses fundraise continuously from their existing professional network even though it means receiving smaller sums of money each time. Further, the UK is witnessing an evolution in startup advising. Namely, receiving business and legal recommendations is no longer limited to specific institutions that require application and approval. Knowledge regarding startups becomes democratised and available online. Lastly, as SeedLegals report, deal terms benefit founders more than ever while previously, investors had the last say in the game.