‘Texit’ fears as UK tech firms eye move to Ireland

Ireland's technology sector could witness an influx of UK firms, particularly in the fintech sector, in the wake of Brexit. Leading lights of the UK's technology sector are trying to calm fears of a so-called "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 tech sector is an inherently uncertain sector at the best of times. At its core, it is about generating ideas and building products that will grow to hundreds of times their initial size, 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,” Laura Koetzle , a director in the firm, said.

Gary Stewart, the director of Wayra UK, a start-up accelerator owned by Spanish multinational telecoms firm Telefonica, issued an impassioned response earlier this week. “As entrepreneurs, start-up life is risky and uncertain enough; few entrepreneurs that we know had expressed much appetite for increasing their daily dose of uncertainty by disturbing the seismic macroeconomic and political factors that would be unleashed by Brexit.

“Nonetheless, while leaving the EU will impose new and perhaps unwanted challenges on the UK’s start-up tech scene, it is clear that there is more that the start-up community can do to help assuage these feelings of dispossession felt by so many Brits.”

Mr Stewart added: “The Brexit vote was a wake-up call that we must change this sense of despair before it gets too late and we believe that entrepreneurship – and the entrepreneurial ecosystem more generally – have an important role to play here.”

Smaller groups also made their own pleas for government policy to take tech firms into account when negotiating for Britain’s future.

Alex Hoye, cofounder of the Runway East co-working space, argued that retaining freedom of movement was crucial, whatever form a new settlement took. “To stay as Europe’s leading tech hub we must have continued access to Europe’s leading tech talent, drawing the best from the 500 million strong population of the EU.

“However, saying that our door will remain easily openable for tech talent from the EU requires no negotiation; the government can solve the threat of large scale Texit with a word and our main concern is that they do it sooner rather than later.”

Perhaps the pithiest response came from London’s Atomico venture capital firm: “Keep Calm and Code On.”

“Let’s face it: Brexit was not the result we wanted,” the team said. “For UK tech, now is not the time to make rash decisions or pack our bags. Entrepreneurs are resilient. We’ve seen this over and over again. Microsoft and FedEx started out in the 1973-1975 oil crisis and US recession. Skype was founded in 2002, during what was still the dotcom nuclear winter. Airbnb, Spotify and Uber were born during the 2008-2009 financial crisis.

“This,” it added, “if it turns out to be a crisis, will be no different.”

The broader battle to lure the tech giants is fierce, with competition for Dublin from Singapore, Luxembourg, Frankfurt and Amsterdam. However, according to Tracy Tuohy, commercial solicitor and tech specialist solicitor at Keystone Law, a move closer to home is the logic step for UK business unsettled by the referendum result.

“In the wake of Brexit, relocating or expanding operations to Ireland seems the most sensible choice for any UK technology company seeking to retain a foothold in the EU market. In addition to the obvious attractions of language and proximity to London, Ireland’s tech industry is booming.

"Tech giants and start-ups use Ireland as their gateway to Europe, " Ms Tuohy added, "and it makes sense for UK tech companies to continue to enjoy access to European markets by joining this booming industry."

Noel Moran, chief executive of London-based Prepaid Financial Services, is already eyeing up a move to consolidate the company's existing presence in Navan, Co Meath.

With a predicted £44 million turnover, his company provides prepaid card solutions to consumers and businesses across 24 EU countries. Mr Moran cited the depth of talent and resources in Ireland’s financial technology arena, combined with a domestic banking market ripe for a disruption, as a potent combination.

“A move to Ireland would be a great opportunity for the regulator to create local fintech jobs outside of Dublin in the immediate short term,” he said. “Expanding our Navan operation would create an additional 50 jobs over the next 12 months, and would drive greater competition with the banks, which can only benefit Irish citizens, so it could be a win-win for everyone involved.”

Describing the UK’s financial regulator as the most proactive in the world, he said working with bodies such as newly created Fintech and Payments Association of Ireland would be high on the agenda.

Mr Moran listed some improvements that could be introduced by Irish authorities to lure further start-ups from London.

"I would like to see a similar capital gains tax reliefs for entrepreneurs that we have in the UK introduced to Ireland, which would be game-changing for the fintech start-up landscape, potentially enabling entrepreneurs to establish, start and remain in Ireland as opposed to being lured to Silicon Valley if they happen to have the 'next big thing'." – (Additional reporting: Guardian News Service)