21% of UK start-ups plan to launch European operations ahead of Brexit

21% of UK start-ups have said they will remain in the UK but open a European outpost in light of Brexit, according to Silicon Valley Bank’s latest Startup Outlook report.

The annual survey of technology and healthcare start-ups found that 11% of respondents were thinking of moving their headquarters to Europe, 5% had plans to move outside Europe and 62% had no plans to open a European outpost.

48% were expecting 2017 to be better than 2016 – down 10% on last year – while 36% thought it would be the same and 16% thought it would be tougher. 89% of those surveyed had plans to grow their workforce over the coming year.

In light of Brexit, non-British employees worried about their long-term opportunities in the UK (32%) was the top issue facing UK start-ups, followed by attracting venture capital (VC) funding (21%), the rising costs of running a business (21%), attracting European talent (12%) and selling to Europe (7%).

Respondents were also asked about fundraising, with 81% saying it had become somewhat or extremely challenging. Another 56% said they expect VC funding to be their next source of finance, 55% that their realistic long-term goal was to be acquired and 16% were aiming for an IPO. 85% expected to see the same number of acquisitions this year as in 2016.

Of those surveyed, 76% said access to talent is their most important public policy issue (up from 61% last year), 96% claimed it can be challenging to find people with the right skills to grow their business, 36% said lack of access to talent has inhibited product development and 32% that scaling operations has been tougher as a result.

Phil Cox, head of Europe, the Middle East and Asia and president of Silicon Valley Bank’s UK Branch, said:

“While 21% of innovators say they will be opening European outposts, the majority will continue to back Britain as the home for their headquarters.

“Businesses are seeing more opportunity than fear, which can only be a good thing. Though startups are feeling less optimistic about 2017 than they were about 2016, even more are looking to grow their workforce this year. Not without challenges, but the British technology industry is not slowing down.”