U.K. Opens Door to Tech Talent, But Brexit Concerns Remain
(Bloomberg) -- The U.K. government plans to double the number of visas for highly skilled workers, including technology-savvy candidates, but a Brexit-fueled lull in funding for startups remains a concern for the industry.
The number of Tier 1 visas for "exceptional talent" will double to 2,000 a year, with the government-funded industry body Tech City UK granted an extra 21 million pounds ($27 million) to attract experts to areas outside London. The government is also launching a new 20 million-pound fund for public services to invest in artificial intelligence.
"As we prepare to leave the European Union, I am clear that Britain will remain open for business," said U.K. Prime Minister Theresa May in a statement. "That means Government doing all it can to secure a strong future for our thriving tech sector."
These Tier 1 visas are currently shared among other industries such as science, medicine and the arts, with the tech sector getting 250 places. The documents give immigrants the right to live, work and tap government benefits like health care for at least five years. But before Brexit there was little need for applications, with the majority of workers coming from within the European Union. Brexit may slow such labor mobility, and the U.K. government expects the number of tech-related applications to significantly increase.
While the U.K. is trying to lure tech workers from abroad, the administration of U.S. President Donald Trump is cracking down on a similar program.
The U.K. tech sector enjoyed a flurry of positive news following concern that Brexit may put off foreign investment. Facebook Inc., Snap Inc. and Google all announced plans to increase hiring in the U.K., while Apple Inc. is leasing about 500,000 square-feet of office space at Battersea Power Station on the south bank of London’s River Thames.
While the country remains attractive to large international companies, a drop in funding may force talent to look elsewhere. At least four venture capital funds put fundraising on hold after the European Investment Fund halted its backing of U.K. funds following the Brexit vote, according to people familiar with the matter. Almost 40 percent of funding for U.K.-based VC firms comes from this EU-backed vehicle.
While there have been sizeable funding rounds in 2017, fewer than 10 percent of firms that receive seed funding in the U.K. reach a fourth round of investment, compared with nearly a quarter in the U.S., according to a U.K. Treasury report.
“Investment and support needs to be far more substantial to underpin what could be a world-leading technology sector," said Russ Shaw, founder of Tech London Advocates, an industry group. "For this backing to really be meaningful, it must be the start of a series of targeted investments and an overhaul of the U.K.’s immigration system."
Other European cities are also upping their game to attract talent. French President Emmanuel Macron wants to make his country “a startup nation,” while local billionaire Xavier Niel has spent 250 million euros ($291 million) to transform a former Parisian freight station into a startup campus with 3,000 desks for rent.
In a February survey of 940 startup executives, 1 in 10 said they were considering shifting their headquarters out of the U.K. to other European countries.
©2017 Bloomberg L.P.