Bucking economists’ predictions
While the short-term outlook has bucked many an economists’ dark predictions – with the FTSE 100 Index rising some 20 per cent since the 23rd June vote – the long-term sustainability of any uplift in economic conditions post-Brexit will not continue unless we continue to invest at a grassroots level. It is, in essence, a potential house of cards, but this is the time to remain positive, as the future remains bright.
As Apple CEO Tim Cook put it recently: “times are not really awful, there's some great things happening.” Whichever way you voted in June, I’d encourage you to feel the same. It may seem easy for large multinational brands such as Apple to remain positive about still being able to flourish, but it is a sentiment we can all learn from. Now more than ever, we mustn’t forget our home-grown startups and entrepreneurial community.
A nation of shopkeepers
As Dragon’s Den highlights on a weekly basis, the UK is a nation of entrepreneurs – or shopkeepers, as the famous Napoleon saying goes. Through innovation, a few driven people in a small office can shake up a whole industry. Big companies sitting on gold mines are often at a disadvantage to the humble entrepreneur because they struggle to innovate. They are generally not nimble enough and fear that they have too much to lose. Disrupting the status quo is why entrepreneurs exist. I, for one, never want this entrepreneurial spirit to die and want to see investment boosted to help the UK’s budding entrepreneurs kick-start their ventures.
Nurture local talent
It is important that we continue to invest and nurture local talent. Shots have already been fired across our economic bows from the other side of the channel. Valerie Pecresse, president of Ile-de-France, warned that Brexit is opening up “fierce competition” between the European capital cities looking to shift business away from London. Pecresse was adamant that Paris would be a very stable choice for those international companies looking to move away from London – large and small – and that an exit from the EU will lead to London losing its ‘financial passport’; a commercial advantage of unrestricted financial trade that EU member countries benefit from.
This followed months of warnings from commentators suggesting that the Brexit result will hamper the UK’s long-term economic outlook; causing wider problems for inward business investment into the UK. It is, however, not a view I necessarily agree with. London remains a great hub full of innovation and exciting early stage companies. While many businesses are threatening to move away from the City, I also speak to many that are as committed to staying as ever before.
Regardless of economic conditions, support for entrepreneurs should never waver. Yes, the scale of investment might be impacted if the economy is challenged but this shouldn’t mean that the scale of nurturing and advice given to start-ups should falter. This isn’t just the responsibility of the investment community; government has a part to play in supporting entrepreneurs. There is a positive long-term impact for government support for start-ups; it’s essentially economic forward planning. While investment in the start-up community might not bring short-term economic reward, it builds for a stronger business community in the long-term.
Maintain a stiff upper lip
Recent data suggests that investment in UK startups and fast-growing private companies fell dramatically in 2016, with venture capital firms running for the hills. Deal numbers fell by 18% to 1,460 and the total amount invested declined by 12% to £4.1 billion. It is, though, important to remain cautious before pointing the finger at the Brexit vote being wholly responsible for these results. Whilst investment fell each month after January 2016 – as negative press coverage in the run up to June’s referendum began to swell – the busiest month for investment was actually in September after the dust had settled.
If there is one thing that can be used to describe British entrepreneurs, it’s that stiff upper lip mentality and refusal to accept the state of doom-and-gloom predicted by some. It’s important that investors feel the same way. Now more than ever, the value of a business is in its intellectual property (IP). Whether a business is headquartered in London, Paris or Timbuktu, it makes little difference to its chance of success. A good idea will generally always flourish; however, it is still important to nurture and help startups during their formative years and provide them with the grassroots support they require to prosper.
It's not just investment that start-ups benefit from. If we refer back to the Dragon’s Den example, it isn’t just the money that budding entrepreneurs pitch for; it’s the experience and the knowledge of the investors to help them scale up their business. Pure-play digital start-ups need more than just the money. These are businesses that still need investment, but unlike traditional commercial outfits, that might need investment for factory use or to fund logistical support, they need expertise to help manage the rollout of their online business – as well as the bread and butter support of financial advice.
Building a community of entrepreneurs
It is important that investors continue to back early stage startups and help ambitious entrepreneurs develop high-growth profitable businesses. To help facilitate this, I think we should be building a community of entrepreneurs to share knowledge and skills for the collective greater good.
The way I see it, sharing is a winning attitude. Sharing knowledge, sharing data, sharing success. Not doing so means that you’re afraid that someone else could become better than you. Yet, sharing is the way you improve and grow. As mentioned before, you win because you offer the best product, the best service, or the best price – not because you don’t share.
Let’s get behind our budding entrepreneurs every step of the way, from seed capital and testing to systems, advertising and hands-on training. Because sharing never goes one way: it fosters partnerships, and partnerships provide solutions.
Benjamin Trochu, co-founder and managing partner of Iron Capital
Image Credit: PHOTOCREO Michal Bednarek / Shutterstock