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Post-Brexit immigration: mission accomplished?

The difficulty of UK relocation post-Brexit means trouble for the country's status as a tech hub.

Credit: a view of london city skyline from a helicopter
Nicolas Colin

By Nicolas Colin

A few weeks ago, journalist Michael Neudecker wrote an article for the Süddeutsche Zeitung to share details about his move from Munich to post-Brexit London: many appointments, an absurd language test, demands that are almost impossible to meet (can you account for all your international travels over the past 10 years?) and a high cost (five figures).

Crossing the Channel used to be seamless when the UK was a member of the EU. It has now become a long and challenging obstacle race. 

Indeed, one has to wonder: if moving to the UK has become difficult for a seasoned journalist employed by the most prestigious daily newspaper in Germany, how are things for the average startup founder?

Nothing suggests it’s easier. The British government set up two visas to “facilitate” tech entrepreneurs moving to the UK: the Innovator Visa and the Startup Visa. The delays mentioned on the website are relatively short, but the cost and restrictions suggest a large amount of hassle.

I’ll let you appreciate the irony of having to demonstrate that your business is innovative to the local bureaucrats, undoubtedly the best judges in such matters. 

For instance, once you’re in the UK, you’re stuck with your business and can’t work on anything else. This rule goes against startup reality: founders should be encouraged to close their company if it doesn’t work, not to keep it alive at all costs because their right to stay in the UK depends on it.

Another thing is that the business should be innovative, as in “you must have an original business idea which is different from anything else on the market.”

I’ll let you appreciate the irony of having to demonstrate that your business is innovative to the local bureaucrats, undoubtedly the best judges in such matters. A new breed of consultants is probably already offering expensive services to help you demonstrate how fundamentally different your business is, using the appropriate jargon and ticking the right boxes.

But beyond that, it’s all based on a misconception of what startups are about. Most startups succeed not because they’re innovative but because their founding team is better than the competition and all the parts of the business fit together perfectly.

Indeed, startup success is about imitation and improvement more than innovation. Brilliant foreign founders such as Revolut’s Nikolay Storonsky or Deliveroo’s Will Shu certainly wouldn’t have passed the innovation test back in the days.

That leaves Tech Nation, a government-funded industry body that has been designated by the Home Office as able to endorse applications for the Global Talent Visa in digital technology, another route for highly-skilled, experienced digital technology workers.

The organisation said yesterday it has received more than 4k applications since 2014 and that a third of those have come in the last 12 months. But those numbers are a drop in the ocean; according to Tech Nation’s own data, nearly 3m people work in UK tech. The organisation withdrew its endorsement support for Innovator and Startup visas last year

The Global Talent visa allows recipients to choose their employer or even start building a company but requires an impressive track record already in the field. 

The UK versus Silicon Valley

But it’s not only the UK — the United States has also made it difficult for founders to immigrate and settle in Silicon Valley. Like the new post-Brexit regime in the UK, it’s expensive, comes with a lot of hassle and restrictions and involves sponsoring and numerous recommendations — usually by VCs who have decided to back the company. How is the British situation any different? 

The first thing is that London doesn’t have the attractive power of Silicon Valley. Sure, it’s a great, cosmopolitan city with a solid financial services industry and prominent media and tech institutions. But the English language does make it a prime destination for anyone willing to build a business with an international footprint.

London is also the European city where the most prominent VC firms have their headquarters. On the other hand, those firms have learned to deploy capital across borders;  they won’t be able to attract founders in London like US VC firms located on Sand Hill Road once attracted founders in Palo Alto and Menlo Park.

Meanwhile, several other European cities are deploying resources to become more attractive for founders, especially from the EU. Once it becomes easier to find an apartment in Paris, find a job for your spouse in Berlin and interact in English in your everyday life in Barcelona and Helsinki, how do you think European founders will consider the obstacle course Neudecker wrote about in the SZ?

It’s not only the cost and the hassle, after all. It’s also the feeling that it inspires in foreign applicants.

It’s not only the cost and the hassle, after all. It’s also the feeling that it inspires in foreign applicants: that the business they want to build is suspicious, that they are not exactly welcome, that they can only stay for so long, that their residence status will always be precarious. The US can afford to inspire such feelings because Silicon Valley is such a magnet at a global level. I’m not sure the UK can do the same, considering that London is a magnet at a continental level at most, one that’s not even sure to remain so as other vibrant ecosystems emerge on the continent.

It begs the question: is it even a policy goal to attract European founders to London? Brexit, after all, was the choice of voters who wanted immigration to end. They wanted to see a kind of ‘hassle theatre’ — recent policy suggests the British government is busy implementing precisely that.

When we Europeans read Neudecker’s account, we’re sad that Britain has shot itself in the foot and horrified by the prospect of having to go through the same hassle should we want to grow a tech business from the UK.

But when most Brexit voters read the same article (assuming they understand German, which is admittedly a long shot), what they’ll conclude is: “Mission accomplished! We voted to keep as many of those people out, and now it seems our government is acting accordingly.”

Nicolas Colin is cofounder of VC firm The Family. He writes a regular column for Sifted.

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Jack S
Jack S

It’s worth noting that tech founders are not the kind of migrants that most Brexit voters wanted to keep out. Brits who voted to leave for immigration reasons were generally concerned more with 1) Eastern European workers driving wages down and forcing people out of manual professions in lower-income areas and 2) Following the migrant crisis, immigration from migrants who have come from poorer countries to the EU, in order to get to Britain. Most Brexit voters want to find a way for Britain to restrict numbers of these kinds of migrants, and couldn’t give a damn about, or may… Read more »

Phil C
Phil C

Couldn’t agree more. With English being widely spoken as a 2nd language by hundreds of millions of people, the UK was always a draw card. And whilst the EU cannot control their external border, I think now it’s best we are out. Whist working for a bank the sheer number of new accounts I was opening for ‘Italians’ (mostly born elsewhere) or ‘new Europeans’ was a joke. It was an open back door to the UK without the consent of the public. . The EU is a nice idea (and I am pro European) but I seriously doubt whether it… Read more »

Cansu
Cansu

Hi Nicolas – the idea that countries are competing for talent is not as strange a notion it once was for the UK I’d say, but learning it the hard way. I had detailed my experience as a non-EEA national a few years back here, might be of interest: https://www.linkedin.com/pulse/uk-immigration-hard-here-why-you-should-care-someone-bayrak/

Alex Pospekhov
Alex Pospekhov

But still, London is London & it’s easier to raise capital in it than in other major EU cities? 33% of the EU VC investment is till not UK, but London. Until this changes – founders could go through any type of red-tape hell .

Nicolas Colin
Nicolas Colin

Agreed—when it comes to accessing money, founders are like junkies: ready to do about anything. But my view is that it still has a systemic adverse effect. Before Brexit, the default scenario was an EU citizen settling in London, building a business, and raising funds from London-based VCs. Now it’s something else entirely: building a business somewhere on the continent, then approaching London-based VCs over Zoom, and finally settling in London once one of those VCs confirms they’ll invest.

Mike G
Mike G

A good piece, but you’ve soft-pedaled the differences between then US and UK which has allowed the US to remain a talent magnet despite its own poor track record on immigration policy. Market size, for example, or the equity culture in the US that distributes gains among teams rather than concentrates them at the top, or even California’s ban on non-competes versus the “gardening leave” that is the norm in the UK. These are just some of the key assets that the UK lacks. Good luck to those responsible for finding solutions.

Nicolas Colin
Nicolas Colin

I agree! Thanks, Mike, for commenting.