The success of the UK’s tech sector was marked this week by TechCrunch’s Disrupt European conference which relocated from Berlin to London for the first time. The annual conference marks the coming together of the brightest and best tech gurus and budding start-ups pitching to be the next big thing. But the UK itself might not be their best launchpad as inhospitable immigration policy is handing the initiative to Canada, Australia and others in the race to attract tech entrepreneurs.
Despite TechCrunch’s vote of confidence, the UK may well see its efforts to attract business undone by a counter-productive immigration policy that sees the UK outstripped by states with more welcoming visa systems.
‘What we see on the ground is that start-up entrepreneurs are struggling with immigration bureaucracy,’ says Jospéhine Goube, spokesperson for Migreat, an immigration research company that seeks to make the whole process easier for those wanting to bring their skills to the UK. ‘When you look at how Canada, Australia and other countries like Germany are offering smoother immigration processes for these guys, what we fear is that start-up entrepreneurs are going to move there instead of London.’
Uncertainty, the enemy of business, is a major factor. Entrepreneurs need to know they can live and work in the same place for at least three years, however the current Byzantine start-up visa system requires non-UK citizens to secure £50,000 worth of sponsorship from a government-approved funder or £200,000 from elsewhere.
Additionally Goube points to the difficulty in getting start-up visa funding. The UK allows three official sources of funding for visa applicants but ‘these are almost ridiculously a scam’ as no government department is going to give you £50,000 in a recession, there are only four recognised accelerators, all reluctant to provide a start up with that amount and the FAS registered VCs don’t invest in early stage start-ups.
This is a struggle for many start-ups without a business track record and is further compounded by the obtuse withdrawal of the post-degree visa in 2012, meaning those who spent years being educated in the UK are now unable to put back into the economy and leaving employers reluctant to invest in the time and paperwork necessary to sponsor a visa application. The government also seems to have decided three quarters of foreign entrepreneurs are failing, with the visa renewal rejection rate reaching 75 per cent last year. By contrast the figure in Australia and New Zealand has been less than 20 per cent in recent years.
Goube praises the German system for being transparent and easy to understand but singles Canada out as the benchmark: ‘It’s the only country in the world that has introduced a start-up visa that is not temporary, that is permanent. And this visa is amazing because you don’t have just one source of funding allowed, you can be funded by a venture capitalist, a business centre, a business incubator. The capital you need to bring to Canada will depend on where the source is, and if you’re in a business incubator you don’t need money and you have access to Canada for life. Compared to the UK it’s just welcoming.’
Someone who could benefit from such a progressive outlook is Flubit founder and CEO Bertie Stephens. Flubit is an online independent marketplace looking to undercut giants such as Amazon and recently closed a funding round of £5 million as well as signing a major deal to white-label its services for Barclays.
Stephens is fully aware of the irony of the government both encouraging start-ups and making it harder for tech entrepreneurs to get UK visas: ‘If start-ups have taught us anything, it’s that unless you keep iterating and improving, you will lose out. This is the same with global talent. The UK needs to keep changing what it offers in order to make sure we succeed.’
Goube says Stephens’ dilemma isn’t unique. Across the UK, ‘Start-ups have an issue recruiting talented people with software skills.’ She says candidates from Eastern Europe and Russia are struggling to navigate a ‘deliberately opaque’ UK visa system, something Migreat are looking to address by developing a web tool to make visa application easier to understand and execute.
The consequent lack of supply is further stifling growth as nascent start-ups struggle to stop their stars being poached by much larger firms: ‘We run weekly demos, socials, a monthly cash benefit scheme, equipment perks and more but we’re always looking to do more. Keeping people is key, and it’s one of our biggest missions,’ says Stephens.
Following David Cameron’s recent bid to limit the rights of EU citizens to work in the UK, there’s a worry such political foot-stomping might prove economically counterproductive: ‘People have very strong views about immigration. But if the UK left the EU and the free flow of citizens ceased, it would collapse a great part of the tech industry,’ says Stephens. ‘The naïve approach is to think that by closing the doors UK workers would simply fill the shoes, but right now there are too many jobs in the tech industry for the amount of great UK techies – the people need to keep flowing.’
Goube is also critical of the UK’s regressive approach to immigration: ‘It’s fear. It’s trying to present a view of people stealing jobs, they’ve tightened the rules to prevent abuse instead of making it easy for migrants to be productive to the economy. If you want to get a voice in the press today, you have to talk about immigration, in the way you address UKIP.’ Goube also points out that adoption of an Australian-style immigration system, as championed by UKIP, would actually allow more people to come to the UK, ‘as it’s more flexible, you don’t need a job to move there.’
In April I spoke with Eduardo Molina, a Mexican employed by a Silicon Roundabout start-up. As is common with a fledgling business, they were unable to secure the funding to keep him on, meaning once their sponsorship ended he was in a race to find a new position within 60 days or leave the country. Many companies would have taken him on but couldn’t afford the time and paperwork to renew his visa. I caught up with him for this article, and happily he’s found a new position – but in New York.