Connect with us

Private Equity

The end of the Brexit as we know it

In April I predicted here on my blog the United Kingdom would vote for “Leave” in the EU Referendum….

Avatar

Published

on


image

In April I predicted here on my blog the United Kingdom would vote for “Leave” in the EU Referendum. As to many people I was right on this analysis and the reasons were confirmed by a lot of experts. Not much here to celebrate because the outcome of the Brexit process will be an economical disaster on all levels for a lot of people involved inside and outside the UK. But everybody realized that in the meantime.

The Pound Sterling was falling like the cliffs in Dover:

image

The UK is facing some of its members to seek independence:

image

But what is coming next if Brexit happens?

Most of my fellow VCs in London were tweeting “Calm down + Carry on coding” to encourage their portfolio companies to work through uncertain times by focus on their business. It is the best advise for days like this, but it needs to be clear that a strategic roadmap needs to be developed in the evening and nights as founders usually do to grow and expand their business. ‘Nothing will change’ is rather wishful thinking in that regard.

image

That markets came back rather quickly could be seen at the end of the week following the EU referendum:

image

So changes to the London ecosystem are to look at for the future becomes important for everybody in the industry:

  1. With UK leaving EU legal framework (regulations, data privacy, financial transactions, etc.) and access to single market it is limiting companies to grow beyond their local markets.
  2. Freedom of movement for work will drive Non-UK talents to seek employment elsewhere inside EU rather than UK and make talents think twice to move a business and themselves to London in general.
  3. Fortune500 companies as well as startups will evaluate to move their headquarters to locations inside EU and select from various options: Dublin, Paris, Frankfurt, Berlin, Amsterdam, Lisbon, Barcelona, etc.
  4. VC funds depend on investment restrictions of their LPs, who could demand them to invest in EU countries only based on origin (e.g. EU supported EIF) or for limiting risks due to economical uncertainties of a location outside the EU in general.

Economical Prediction for European Startups

Based on the assumption above we will see the following impact as an eroding process over the next five years. Nothing will have an impact the next coming days even if some prominent decisions will be announced over time. We need to look at midterm statistics for the next 36 months to see the consequences and trends.

  1. There will be not one ecosystem gaining major uptake from companies leaving London. All EU ecosystems will have advantages to be evaluated: Dublin is close by culture, Paris by distance, Berlin by its international community, Frankfurt as a financial hub, Amsterdam holds tax advantages, Lisbon and Barcelona has a fresh community and sunny weather. Founders and corporations will pick individually by their needs.
  2. Entering UK markets for a startup will need a profound analysis from companies: Due to currency rates it will be cheap to enter but due to missing legal framework (trade deals) it will be expensive to maintained. So expansion into UK of new businesses will slow down and some local heroes will trigger M&A activities from outside UK.
  3. Public listed companies will face decreasing market caps over time. This will limit their abilities to acquire startups (limited exit channels) and at the same time will trigger potential take over activities from EU based competitors as well as U.S. and Asian based gorillas.
  4. Not only VCs will limit investments in UK companies but als EU itself will stop investing in UK research, science and infrastructure. This will limit growing new companies and founders in the long term. Less data science and hardware related projects at UK universities will produce less bright minds who would have started their companies in the decades to come.

While short term impacts can easily reversed over time if conditions will change, the long term consequences are more sever for the future of remaining UK.

Potential hope 2017: Brexit will never happen

While all analysis and predictions over the coming weeks will take the past into account there is the future: the undiscovered land.

The UK constitution needs a parliament to invoke Article 50 in Lisbon contracts of the EU and support will be hard to find for a step the majority of the MPs in all involved parliaments are most likely not willing to take.

With more details and reports emerging and the consequences being more visible for ordinary people the majority of a vote in 2017 could insist on a #Remain in EU. Important for such a decision would be larger time gap in-between those two election events. It looks like the UK politicians of all parties are betting on time for now at least into 2017. However damage has been done to the UK ecosystem and that can not be reversed. It will take additional time to come back from this days and weeks.

Most critical about the Brexit experience will be that the rest of the world understood there are alternatives to London and the UK for many businesses, from small to large. For the future every CEO will have the option to #Leave London and the UK to seek growth and success anywhere else. Opening that opportunity is the most critical outcome from last weeks result.

Source: https://thomasgr.tumblr.com/post/146824113425

Private Equity

Gulf Capital backs CWB as part of $60mln IP platform build

To read this article, you must be a paid subscription member. (Current members login here) […]

The post Gulf Capital backs CWB as part of mln IP platform build first appeared on https://africacapitaldigest.com.

Avatar

Published

on



To read this article, you must be a paid subscription member. (Current members login here)

Reserve your digital subscription today

Join now for $35 per month

Join now for $395 per year

for access to:

  • Weekly newsletter with original and curated news, analysis and perspective
  • Africa’s private capital deals, fund raises and the investment firms and executives involved
  • Portfolio company news that impacts value and stakeholder participation
  • Job moves and partnerships between leading market participants
  • Exclusive access to Africa Capital Digest’s full content archive

If you’d like more information on exceptional value group subscriptions for your colleagues and teams, please contact Teresa Hall at thall[at]africacapitaldigest.com today.

Source: https://africacapitaldigest.com/gulf-capital-backs-cwb-as-part-of-60mln-ip-platform-build/

Continue Reading

Private Equity

Allianz-managed AfricaGrow backs first two funds

To read this article, you must be a paid subscription member. (Current members login here) […]

The post Allianz-managed AfricaGrow backs first two funds first appeared on https://africacapitaldigest.com.

Avatar

Published

on



To read this article, you must be a paid subscription member. (Current members login here)

Reserve your digital subscription today

Join now for $35 per month

Join now for $395 per year

for access to:

  • Weekly newsletter with original and curated news, analysis and perspective
  • Africa’s private capital deals, fund raises and the investment firms and executives involved
  • Portfolio company news that impacts value and stakeholder participation
  • Job moves and partnerships between leading market participants
  • Exclusive access to Africa Capital Digest’s full content archive

If you’d like more information on exceptional value group subscriptions for your colleagues and teams, please contact Teresa Hall at thall[at]africacapitaldigest.com today.

Source: https://africacapitaldigest.com/allianz-managed-africagrow-backs-first-two-funds/

Continue Reading

Private Equity

Lilium Capital’s Vista Bank acquires two BNP units

To read this article, you must be a paid subscription member. (Current members login here) […]

The post Lilium Capital’s Vista Bank acquires two BNP units first appeared on https://africacapitaldigest.com.

Avatar

Published

on



To read this article, you must be a paid subscription member. (Current members login here)

Reserve your digital subscription today

Join now for $35 per month

Join now for $395 per year

for access to:

  • Weekly newsletter with original and curated news, analysis and perspective
  • Africa’s private capital deals, fund raises and the investment firms and executives involved
  • Portfolio company news that impacts value and stakeholder participation
  • Job moves and partnerships between leading market participants
  • Exclusive access to Africa Capital Digest’s full content archive

If you’d like more information on exceptional value group subscriptions for your colleagues and teams, please contact Teresa Hall at thall[at]africacapitaldigest.com today.

Source: https://africacapitaldigest.com/lilium-capitals-vista-bank-acquires-two-bnp-units/

Continue Reading
Saas3 hours ago

Saas3 hours ago

Saas3 hours ago

Saas3 hours ago

Saas3 hours ago

Saas3 hours ago

Saas3 hours ago

Saas3 hours ago

Saas3 hours ago

Saas3 hours ago

Press Releases4 hours ago

Eisai and Cogstate Expand Agreement for Global Development and Commercialization of Digital Cognitive Assessment Technologies

Private Equity4 hours ago

Gulf Capital backs CWB as part of $60mln IP platform build

Private Equity4 hours ago

Allianz-managed AfricaGrow backs first two funds

Private Equity4 hours ago

Lilium Capital’s Vista Bank acquires two BNP units

Private Equity4 hours ago

Secha Capital holds first close for $30mln impact fund

Private Equity4 hours ago

Gaia lists infrastructure fund on South Africa’s 4AX

Venture Capital5 hours ago

Societal shift away from cash sends Novatti transaction volumes soaring

Press Releases5 hours ago

BIG NEWS: Endangered White Rhino Born at Disney’s Animal Kingdom Theme Park

Private Equity6 hours ago

No title

Saas6 hours ago

Saas6 hours ago

Saas6 hours ago

Saas6 hours ago

Saas6 hours ago

Saas6 hours ago

Saas6 hours ago

Saas6 hours ago

Saas6 hours ago

Saas6 hours ago

Press Releases7 hours ago

MÉXICOPUEDE.MX, en alianza con Cisco México, brinda asesoría a PYMES

Venture Capital7 hours ago

Robo-advice a complement, not disruptor: Six Park

Venture Capital8 hours ago

TrueLayer heads down under as it begins global expansion

Press Releases8 hours ago

Dunkin’ Brands Group, Inc. Statement about Possible Acquisition

Venture Capital8 hours ago

‘No hard and fast rule’: Fintechs and banks size each other up

Press Releases8 hours ago

SAP SE: Strong Double-Digit Growth in EPS and Cash Flow

Private Equity9 hours ago

MCC and Africa50 plan infra investment platform launch

Saas9 hours ago

Saas9 hours ago

Saas9 hours ago

Saas9 hours ago

Trending