A compilation of important news from the startup world:
Brexit: Uncertainty around funding and skills likely to affect UK tech startups
The tech startup industry as a whole was backing the remain campaign. However, the industry is now faced with a different and uncertain future that is likely to affect investment, funding and skills.One of the main challenges the industry now faces is access to funding. Gartner predicts that as a result of the UK leaving the EU, IT spend will drop significantly not just at home, but in the rest of Europe.John-David Lovelock, research vice-president at Gartner, said the current forecast growth for UK IT spending is 1.7%.“The Brexit will drop this figure between 2% and 5%. In other words, UK IT spending growth will certainly be negative in 2016,” he said.Frost & Sullivan’s research director for digital transformation Adrian Drodz and practice director EIA Ajay Sule added that access to funding and credit will be affected by Brexit. The European Investment Fund [EIF] is the largest investor in UK venture capital firms – whether this funding stream remains in place, and for how long, is a major question mark.” The loss of the digital single market, which Vaizey has hailed as an “opportunity for tech companies in the UK to spread their wings even more than they are already doing”, will also affect the UK’s role as a digital hub.
After Brexit, the race is on to replace London as Europe’s startup capital
London’s favored status among startups seeking a European base is in peril, and its counterparts on the continent are wasting no time in announcing themselves as worthy alternatives. Besides Dublin, there’s Berlin, already home to successes including Rocket Internet and Soundcloud; Amsterdam, which has spawned the major payments player Adyen; and Stockholm, with Spotify and Minecraft’s maker, Mojang.These cities have good reason to capitalize on the UK’s separation from the European bloc. Labor from the EU gives a significant boost to British tech startup headcounts. With Brexit, and a possible end to the free movement of labor for EU citizens, UK startups could find themselves starved of the crucial workers they need to expand.A survey by Wayra, a startup incubator owned by Spanish carrier Telefonica, last year found that one in three UK tech startup workers came from outside the country. That 34% was made up of 20.7% from EU countries, and 13.3% from elsewhere. The most common non-UK nationalities were Irish, American, and Spanish, the survey found. Some of the brightest stars in London’s startup firmament are already pulling the trigger on Brexit contingency plans. The American Damian Kimmelman, founder of the corporate data firm DueDil, told Forbes that he couldn’t put his company’s expansion plans at risk because of talent pipeline shortages.
Brexit could make Europe less friendly to US Tech companies
Silicon Valley’s biggest businesses could face tougher regulations following Britain’s decision to withdraw from the European Union, and some might have to leave London to attract the best employees. Many U.S. tech companies now count on Europe for a quarter or more of their business. Beyond facing a financial downturn as the pound’s value erodes, these companies might find Europe a more challenging environment in which to do business. It could take a year or two before the picture becomes clear. For now, what’s certain is the U.K.’s exit will be complex and unprecedented, with repercussions crossing the Atlantic and reaching all the way to the U.S. West Coast.Meanwhile, U.K. tech companies might have to leave the country to follow their customers and funding sources. Here are some ways U.S. and U.K. tech companies might be affected. In recent years, the EU’s chief antitrust cop has accused Google of thwarting competition by using its dominant search engine to drive traffic to its own services. Apple and other U.S. companies face allegations they haven’t been paying their fair share of taxes in certain European countries. And the EU is adopting stricter rules limiting how much personal information online ad companies such as Google and Facebook can collect from Europeans.
UK tech firms unite to push against ‘Texit’
Leading lights of the UK’s technology sector are trying to calm fears of a “Texit” following the result of last week’s EU referendum.After some of Britain’s biggest tech start-ups, including business data company DueDil and foreign exchange service TransferWise, revealed they are openly mulling an overseas relocation after the historic leave vote, other investors and entrepreneurs have intervened to try to inject some confidence into the shaky industry.A shared subtext runs through many of the statements: Brexit is bad for technology, yes, but the technology sector is an inherently uncertain sector at the best of times. At its core, its about generating ideas and building products that will grow to hundreds of times their initial size, and so even the negative hit from leaving the EU will be small in comparison to the biggest successes. Technology analyst Forrester is one group arguing for a level-headed response. “While times of high-market volatility can tempt firms to panic and cut spending on customer-focused initiatives, now is the time to drive innovation in order to win, serve, and retain customers,” says Laura Koetzle, a director in the firm.
9 reasons to invest in African tech startups
African tech startups received a total amount of funding in excess of US$185.7 million in 2015, according to data compiled by Disrupt Africa, and there is every reason to expect this will grow in 2016. Visit the tech ecosystems of Lagos, Nairobi and Cape Town, or even further afield, and you cannot fail to see high levels of disruptive innovation. From the likes of Rwanda’s SafeMotos, which marries vehicle telematics with an on-demand motorcycle taxi platform, to South Africa’s Custos Media Technologies, which is using the blockchain to tackle digital piracy, innovation is all around. And investors like innovation. Around 80 per cent of Africa’s population – approximately 330 million adults – lacks access to formal financial services. As many as 620 million people on the continent lack access to power. These two statistics alone demonstrate the potential impact technological solutions addressing these issues can have, and speak to the high level of interest from impact investors in fintech and solar startups especially.There may be a great deal of social good to be done by investing in African startups, but that does not mean funding businesses on the continent is a charitable act. If startups can find effective ways of, say, providing millions of people with access to mobile insurance products, or rolling out pay-as-you-go solar products across whole regions, serious returns on investment can be made.
Partech Ventures closes €400m fund to invest in European tech startups
Partech Ventures has announced the closure of a €400m growth fund which will be used to invest in UK, European and US tech.The fund, known as Partech Growth, will seek to invest between €10m and €50m of capital in fast-growing tech and digital firms with significant revenue.“When we launched Partech Growth at the beginning of 2015, we aimed at raising a €300m fund,” said Omri Benayoun, general partner at Partech Ventures. “Faced with strong demand from LPs and startups alike, we decided to increase our capacity to €400m which will enable us to fund the ambitious global expansion plans of the best startups across Europe and the US.”The fund – which has invested €120m in 5 European and US West Coast tech companies – will be managed by a dedicated team led by Omri Benayoun and Bruno Crémel in Europe, and Mark Menell in the US.
CloudPhysics Named One of the Hottest 50 Tech Startups to Watch in 2016
CloudPhysics, provider of data-driven insights for smarter IT, today announced that it has earned a spot in Startup50’s Big 50-2016 report, Jeff Vance’s annual roundup of the hottest tech startups to watch in the coming year. CloudPhysics delivers a SaaS-based IT analytics solution that leverages big data science to continually view and analyze virtual infrastructures, yielding granular intelligence and rich, actionable insights. For example, CloudPhysics has a suite of features that enable customers and partners to identify cloud migration opportunities from their on-premise workloads, to isolate the root causes of performance problems and to optimize the use of compute and storage resources across workloads.CloudPhysics’ analytics platform has two product offerings in market today. CloudPhysics Premium Edition enables VMware vSphere administrators to optimize performance, manage capacity and change, identify resource contention and proactively troubleshoot problems. These capabilities dramatically speed mean time to resolution, reduce risk and waste and support service level agreements.