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If Politicians Can’t Navigate Brexit, How Can UK Start-Ups?

Brexit threatens the UK's thriving start-up scene, what can we do to protect it?

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Brexit threatens the UK's thriving start-up scene, what can we do to protect it?

Opinions

If Politicians Can’t Navigate Brexit, How Can UK Start-Ups?

Brexit threatens the UK's thriving start-up scene, what can we do to protect it?

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We’re four months away from our proposed withdrawal from the EU, and the closer we get, more information is revealed and less decisions make sense for business.

Although the Confederation of British Industry backed Theresa May’s deal, claiming no deal would lead to shortages, the CBI's head of EU negotiations, Nicole Sykes, claimed in a leaked email: “It’s not a good deal."

On top of this, the London School of Economics, King's College and the Institute for Fiscal Studies revealed that, according to the signed off Brexit deal we have at present, the UK’s economy will shrink by five and a half percent come 2030.

The process hasn’t even properly begun, and we’re already seeing knock-on effects. Panasonic announced plans to move its European headquarters from the UK to the Netherlands because of the vote. A swathe of UK fintech startups have also opted to open doors in Eastern Europe before Brexit hits.

And this leaves UK startups in a predicament.

They don’t have the infrastructure, safety net or, when it comes down to it, the money to weather the same storms as brands like Panasonic. Startups might not be able to thrive in an economy that’s shrunk by five and a half percent - Panasonic can.

And the UK has startup talent in spades. Last year alone, the amount of technology startup launches over here increased by a massive sixty percent. Likewise, the number of UK startup launches reached an all-time high in 2016.

Support for startups has always been mixed. The coalition government established a Start Up Loans scheme in 2012, distributing more than £300 million worth of loans to around 46,000 startups. But then, under the assumption it was shared equally, that’s around £6,500 for each startup.

Initiatives like The Prince’s Trust and Southampton University’s Future Worlds accelerator prove that young people are out there, breaking boundaries and bringing new approaches and viewpoints that come with their life experience, rather than ours.

There’s so much diversity in terms of both people and ideas, and programmes like the aforementioned are doing great work to nurture and support them, via funding and mentorship.

One thing we’ve noticed, through our own work supporting startups through the Prince’s Trust, is that many most likely suffer one glaring omission: marketing.

They have the ideas, but they’ve not been taught to sell them.

They don’t have marketing backgrounds - the startup culture created in the US, which has trickled into the UK, gives people the idea that they can make millions off an idea alone.

And that’s just not the case. The idea may be brilliant, but what good is it if nobody hears about it? Marketing is key when it comes to launching a startup, and equally as important when scaling up later down the line.

What can businesses do to help?

The right support can genuinely make or break a business. For example, the popular smoothie brand Pack’d, which can now be found in London Underground stalls and nationwide supermarkets, sought advice from The Prince’s Trust early on in its gestation.

From there, it was given the sound advice it needed to pitch somewhere bigger - this came in the form of Virgin StartUp, which gave Pack’d a £25,000 loan to accelerate.

Pack’d’s frozen, packaged smoothies are a great idea on their own, but without clear advice and early funding, they wouldn’t have gained the £150,000 in angel investments and subsequent name recognition, prominence on the shelf and - this is how you know you’ve made it - a competitor in the form of Tesco’s own-brand imitation.

Another tangible benefit from Pack’d’s success is the way its co-founder, Luke Johnstone, is helping other businesses through initiatives like the Launch Marketing Council, where he is able to relay his knowledge of scale-up marketing in the Council’s bi-annual whitepaper.

This is where big business needs to step up.

Much like Virgin throwing its weight behind startups, other sizeable names have to start showing support. They need to properly invest. Not just pump money into them - actually teach them how to reach and sell to their customers.

Rather than fear the challenge so many startups naturally bring to the marketplace, big business should embrace and support them for mutual benefits. For example, Distill Ventures works with drinks brand Diageo to advise and accelerate budding drinks startups.

Diageo is Distill’s sole investor, and provides funding alongside technical, production and marketing expertise. The former can watch the startups grow within the latter, have a hand in shaping their trajectories, and possibly purchase them outright at a later date.

This knowledge exchange can work on the international stage. Former Unilever innovation boss and founder of CO:CUBED, Jeremy Basset, says even the way startups tackle markets is very different to how corporates view them.

Whereas corporates go for countries, startups look at a market that is common in many countries. This is one of the biggest learnings from current startup marketing and it’s helping younger businesses accelerate past corporates.

By having access to this startup mentality, corporates can learn and adapt quickly.

Offering startups advice on PR, website optimisation, marketing plans and proper social media marketing can give them a decent push in the right direction.

Brexit remains a very expensive question mark at present, and startups will have less incentive to launch if it’s going to be an uphill struggle with fog all around. Given that they account for 80 percent of growth in most industries in the UK, that is the last thing we want.

Without that support, we’re going to miss out on talent never realised. If those with the means help, though, the future looks bright for the UK’s already burgeoning startup scene.

Alexis Eyre is head of marketing at launch specialist agency Five by Five.

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If Politicians Can’t Navigate Brexit, How Can UK Start-Ups?

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