London is expected to retain its position as a global hub for international entrepreneurs following the results of the recent EU referendum, according to research from equity crowdfunding platform Seedrs.
Over half (52 per cent) of Seedrs customers polled agreed that London would remain a global centre for innovative new businesses, while only 16 per cent said they believed London would lose out to other international hubs and the remainder (32 per cent) said they did not know.
The sectors predicted by both investors and entrepreneurs to see the strongest opportunities for growth over the next 12 months in light of the Brexit vote include professional services such as law and accountancy (cited by 29 per cent of respondents), manufacturing (21 per cent), financial services (20 per cent), IT and telecoms (20 per cent), hospitality and leisure (17 per cent) and property (16 per cent).
Entrepreneurs’ biggest concerns post-Brexit are dominated by uncertainty about the future, rather than by potential lack of access to business finance.
More than four in 10 (41 per cent) said their key worry was uncertainty regarding regulatory change and the same proportion (41 per cent) said they were most anxious about losing European trade.
Low growth levels were cited by 35 per cent of entrepreneurs and losing foreign direct investment by 33 per cent, while 27 per cent said rising unemployment was a concern. Only 15 per cent said they were worried about lack of access to business finance post-Brexit.
When asked their opinion about why there may be an increased level of appetite for alternative investments following Brexit, the main reasons given by investors were portfolio diversification (93 per cent of respondents), tax benefits (48 per cent), lack of correlation with mainstream asset classes (39 per cent) and the fact that alternatives have produced strong medium to long term performance returns.
Of those planning to increase their own investment allocation in alternatives, 69 per cent said they expect to invest more heavily through crowdfunding.
Jeff Lynn, chief executive and co-founder at Seedrs, says: “We haven’t seen any slowdown in investment activity since the referendum, and we believe strongly that the UK remains highly attractive for inward investment. Our research supports the view that London will continue to be one of the top destinations for entrepreneurs looking to set up a business. It also shows that equity crowdfunding is still a great source of capital for entrepreneurs looking for first, second or even third round finance.”
Simon French, chief economist at Panmure Gordon, says: "Economies across the globe are facing similar political upheavals, and investors are fully aware when deciding where to locate capital. We believe that a negotiated 'soft Brexit' rather than a 'hard Brexit' will enable the UK to remain dynamic and stay ahead in the global race for talent. The UK can use Brexit as an opportunity to broaden its horizons beyond Europe and reject the ideas of protectionism."
Gray Stern, chief operating officer and co-founder at peer-to-peer lending specialist Landbay, adds: “If I was launching Landbay again in the current climate, London would still be my number one choice, Brexit or no Brexit. New start-ups can benefit from the economic conditions in London and as long as they keep their messages focused, digestible and realistic they will continue to secure equity investment.”
