February 3, 2017
What a week we have had!
The UK’s House of Commons voted for Brexit and newly elected President Trump announced a visa ban that isn’t a visa ban on people from seven Muslim countries.
My gut reaction to the combination of these events is that Germany will be a huge beneficiary of it all.
Firstly, it has been no real secret that Frankfurt hopes to win lots of the financial services business that London currently enjoys. It seems clear to me, at least, that longer term that is very likely to happen.
Secondly, it seems to be very likely that some or all of London’s fintech scene will move as well. My guess is that Berlin will be the recipient of these firms. There is already a well established start-up scene in Berlin, so developers and techies are already there. That will make it easier to attract more of them. Additionally, for cash-strapped start-ups, the reduction in costs will be very welcome.
I am hearing on the grapevine that Malta is likely to benefit as gaming firms located in Gibraltar leave.
Then there is Silicon Valley. Founders, investors and staff that call San Fransisco and it’s surrounding areas home are going to be used to living in a very liberal democracy. Who knows what might happen in the future, but if this community, including the financial start-up space, does not like the first two weeks of President Trump, there is every chance that they will be even less happy after two years…
Will they leave? Mostly I would think that they will not. The bigger firms are just too invested in the area. But smaller companies might be tempted to leave, post Brexit.
Where might they go? They could go north to Vancouver or Toronto. They might also find Europe to be appealing. But when you think of it, there are only a few places that can reasonably be described as having a real bona fide start-up community in Europe: Amsterdam, Barcelona, Berlin, Dublin, Lisbon and London being the main spots.
Dublin is already incredibly expensive. London will be leaving the EU, making it less appealing. As the list thins, Berlin is still there.
Many other countries just won’t fit the mould. The Nordics will be too tax heavy. It takes too long to get anything done for Italy to be an option. Estonia could be interesting, but it’s location might be a problem for aspiring tech titans.
As hard as governments and Member States might be trying, it really is not easy to deliberately make a location a start-up hub. There are so many parts of the puzzle that need to be available and few locations have them all – especially lots of early stage investors. So far, few have got things right and some of those have had it happen totally by accident simply because the city was cool.
If you are like me, and are designed for the tech and start-up spaces, now might be the time to start taking German classes.financialguy