By Ryan Weeks on 13th June 2016
The UK’s small businesses are already showing signs of nerves. Business loan comparison website Capitalise.com came out with research last week which revealed that the impending referendum has already impacted business investment decisions for 40% of UK SMEs. A fifth of those businesses are focusing less time and resources on growth in Europe, with 15% admitting to postponing entering into new business relationships ahead of the June 23rd vote. Paul Surtees, MD and Co-founder of Capitalise, said of these results: “There have been countless forecasts on a future outside of the EU but we have uncovered that the threat alone is having an impact.”
So Britain’s businesses are spooked, but with the In/Out vote looming large, there’s been a surprising dearth of Brexit-related chatter within alternative finance circles. We’ve had but one guest submission on the matter, courtesy of ArchOver COO Ian Anderson – and that was all the way back in March. He polled the Twitterati to ask whether a Brexit would significantly impact the UK’s fintech sector in terms of “capital and talent”. 59% of around 50 voters said, “Absolutely it will”, thereby winning the day. But what are the big names in the UK’s alternative finance sector saying?
Let’s start with a few platforms that may already be described as “pan-European”. Both small business lending platform Funding Circle and equity crowdfunder Seedrs currently operate in a number of countries across the EU. The former opted for a short statement: “We are a global business that operates across four European markets. A successful, well-functioning Europe is crucial to a business like ours and we believe this is best achieved by remaining part of the EU.” Seedrs boss Jeff Lynn was more effusive in his backing of the Britain Stronger in Europe campaign: “As a business Seedrs is in favour of Britain remaining in the European Union. We are a pan-European platform with London at our core, and we believe that we and our users stand to benefit from the open market that comes with Britain's continued EU membership; in contrast, leaving the EU creates a number of very real risks for the British business community.”
Seedrs’ users, on the other hand, are split right down the middle. 51% of the platform’s investors and 48% of its entrepreneurs said that they would vote to stay in the EU, with 47% of investors and 43% of entrepreneurs preferring to leave. Said Lynn: “Our investors are everyone from very high net worth city professionals all the way down to much smaller retail investors, and we have entrepreneurs across all sectors. The results came back that it’s almost split down the middle, much like the country.”
Peer-to-peer lending platform RateSetter sees a leaning towards "Remain" amongst its investors. CEO Rhydian Lewis said: “A few months ago - before the leave and remain campaigns had started - we asked our investors for their views. 70% replied they'd prefer to remain in the EU.”
For his part, Mr. Lewis offered a balanced view: “Economic stability is important for growing businesses to be able to plan ahead, and it seems stability is associated with remaining in the EU. But equally we thrive on disruption and change brings opportunity. Leaving the EU would likely further discombobulate the UK’s big banking conglomerates – perhaps that would lead to more competition in finance and help force positive change for savers, investors and borrowers.”
Christian Faes, Co-Founder and CEO of real estate lending platform LendInvest, also opted for a balanced view: “As a fast-growing, technology-based business, hiring the best people to our team is an absolute priority to us. Right now, a large proportion of our 100-strong team is non-British. Whichever way the vote goes, our priority is that LendInvest remains a company where some of the best tech, marketing, sales and operations talent wants and is able to work, regardless of their country of origin.”
But most of the top dogs in the UK's alternative finance sector are coming down firmly on the side of the “Remain” campaign. Take, for example, the thoughts of the UK-focused platforms (which may well be looking to the continent for expansion opportunities in the coming years). Jaidev Janardana, CEO of Zopa, said: “Most people agree that if we choose to leave the EU, it will create a period of uncertainty. This will negatively impact the economy and increase unemployment at least in the short to medium term. We will be vigilant to ensure that our underwriting is adjusted to reflect this. In the longer term, we believe that as a business, we are better off within Europe. We believe it will lead to a stronger economy, a deeper talent pool for companies likes us to hire from and better access to markets outside the UK.”
MarketInvoice CEO Anil Stocker is another firm proponent of the “In” campaign. Mr. Stocker again cited talent as the key consideration: "I think a Brexit could really put a dampener on the growth of UK fintech in the long term. The skills subject is my biggest worry. We wouldn't have been able to achieve what we have so far at MI without such a diverse array of talent. Being part of EU gives us access to much larger pool of talent. To have more barriers in place when it comes to hiring would really hinder our growth as a business. This simply would not have been possible if the UK were to exist outside the European Union.”
Stocker also harbours concerns over the impact of Brexit on access to the single market: “The other concern is international collaboration. Whilst the UK Government has done an excellent job of nurturing fintech, we must treat Europe as a single market if the sector's leading players hope to really scale up. It's so important that the fintech scene doesn't turn into a silo, otherwise any kind of European expansion could be much more difficult.”
AltFi is returning to Amsterdam for its second annual Summit in the city. The inaugural event last year was a roaring success, with key figures from across Continental Europe's alternative finance and digital banking sectors highlighted. These included Jeroen Broekema, managing director of Funding Circle Netherlands, and Mieke van Engelen, head of innovative partnerships at ABN AMRO's standalone lending platform, New10.