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Brexit Could Threaten England's Global Technology Status


In many ways, Britain is one of the world's global centers for new technology. It's considered a hub for startups and investment. It's also a gateway to Europe for American tech companies. But as NPR's Laura Sydell reports, the vote to leave the EU could threaten all of this.

LAURA SYDELL, BYLINE: The day after the vote wasn't an easy one for Tim Rea, the CEO of Palringo, a London-based startup that helps gamers play together.

TIM REA: I was instantly bombarded the next day by 20 or so people in our company who come from other European countries and actually reside in the U.K. and work for our company.

SYDELL: They wanted to know if they were going to be kicked out of England. Rea spoke to me from London via Skype. He told his employees to be calm and, well, carry on. But before the vote, Rea says engineers throughout Europe came to London for opportunity.

REA: You set your sail to London. You go to London. You prove yourself there. You do, you know, amazingly well compared to what you could have done if you were, you know, a talented engineer set in France or set in Spain or set in Germany even.

SYDELL: As Europe's banking capital, London is filled with startups that are creating new financial technologies and ways of using and sorting through data. Cambridge University leads the way in quantum computing. But key to the success has been how easy it is for European engineers to get to Britain. Rea says his biggest fear is that all this talent will get the wrong message from the vote.

REA: Probably worst-case scenario is one where actually they leave of their own accord because they just don't feel welcome or they actually see the U.K. going in the wrong direction.

SYDELL: Ray says the hardest part for him and his employees right now is the uncertainty. He's not alone in that. Robert Siegel is a partner in XSeed Capital, a venture firm. Siegel spoke to me over Skype from Vienna. He says venture capitalists don't like uncertainty.

ROBERT SIEGEL: Because they know that their companies will have a harder time raising money, so they take their pool of capital to protect their existing investments. That's not a good thing for hiring. That's not a good thing for new companies getting started. So in the near-term, I think you'll see a slowdown.

SYDELL: Siegel says, for many tech companies - from Google, to Facebook, to small startups - the U.K. is seen as a gateway to Europe because it's English-speaking and follows EU laws. Some companies keep servers there. But with Britain out of the EU, it could have very different rules. And Siegel says that creates unnecessary friction for entrepreneurs.

SIEGEL: Having to comply with complex and hard-to-implement laws is the type of things that entrepreneurs either don't start their companies or they move into a different place.

SYDELL: But downtimes for some can be good times for others. Zendesk, a software company based in San Francisco, has offices in the U.K. and other parts of Europe, including Copenhagen and Dublin. Its subscription software is used to communicate with customers. Marc Cabi, vice president of strategy at Zendesk, says, when times are tough - and they may be in the wake of the Brexit - Zendesk sells more software.

MARC CABI: Companies in difficult economic times may look at how they retain their existing customers, and our software and lends itself for customer retention activities.

SYDELL: But like many tech companies, Zendesk does have employees in the U.K. who are citizens from the rest of Europe. Cabi says if immigration laws tighten, they will simply move them out of Britain.

CABI: London is a very important business center for us, but we can move people around, if required, to either Dublin or Copenhagen or maybe even our Montpellier office.

SYDELL: And while that works fine for Zendesk, it may not bode as well for England's future as a tech center. Laura Sydell, NPR News. Transcript provided by NPR, Copyright NPR.

Laura Sydell fell in love with the intimate storytelling qualities of radio, which combined her passion for theatre and writing with her addiction to news. Over her career she has covered politics, arts, media, religion, and entrepreneurship. Currently Sydell is the Digital Culture Correspondent for NPR's All Things Considered, Morning Edition, Weekend Edition, and NPR.org.