Brexit Causes European Start-Up Community to Reassess

Sam Schechner reported in yesterday’s Wall Street Journal that, “Britain’s vote to leave the European Union is already forcing Europe’s nimble, tech startup community to reassess operations there—a potential early warning for the kind of dramatic action bigger companies may have to take.

“Dozens of global corporations and executives from multinationals reacted with alarm after the vote, calling for a quick road map for a split, to minimize the sort of uncertainty that can delay or curb investment and hiring. But it could be smaller companies—including Europe’s more flexible vibrant startups—that make the first concrete steps to insulate themselves from the ramifications of a so-called Brexit.”

The Journal article noted that, “Patrik Arnesson, chief executive of Sweden-based Football Addicts, said Sunday that he has scrapped plans to open a second office in London where he had planned to hire as many as 30 people over the next two years. The problem: not being guaranteed to be able freely move staff from Sweden, or hire more from anywhere in the EU.

“‘The U.K. will be less attractive for startups,’ Mr. Arnesson said. ‘One of the most important things is to be able to hire people easily.'”

Mr. Schenchner added that, “London has in recent years grown to become a major hub for European startups, and particularly fintech businesses. Venture capitalists and entrepreneurs say that stems from the city’s status as Europe’s financial capital. But that could change if investors get cold feet about the city’s future.”

Another regulatory uncertainty relates to privacy laws. A strict new EU privacy law is set to go into force in 2018, but it remains unclear if the U.K. will enact a matching law. If it doesn’t, there is the danger that EU privacy regulators will block companies from storing personal information about Europeans in the U.K.—complicating life for any U.K. company serving Europe,” the Journal article said.

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