Top VCs say Production of Multi-Hundred-Billion Tech Start-Up Could be Spurred by Brexit

According to a top Silicon Valley venture capitalist and former Apple executive, Brexit could boost the U.K.’s ability to create the next several-hundred-billion-dollar technology firm.

On Tuesday, U.K. Prime Minister Theresa May gave a speech suggesting that any deal reached with European lawmakers will be put to a parliamentary vote and last year, Britain voted in a referendum to leave the European Union.

May said that Britain would leave the single market but it’s unclear how this could play out. Getting rid of EU regulation could help the country’s start-up sector grow bigger, Joe Schoendorf, a VC at Accel, said.

“I think if you had to pick one country to invest in Europe today, you’d pick Great Britain … and the reason you’d do it is because of Brexit. One of the things that the U.S. government has been really good at … is leaving Silicon Valley mostly alone,” Schoendorf said during a panel discussion.

“Government regulation and free enterprise and start-ups trying to be something are pretty incompatible. And so with Brexit and Great Britain pulling the EU out of the loop, I think you will be surprised with the momentum with that sector in particular.”

According to London & Partners, a promotional firm for the Mayor of London’s office, citing data from PitchBook, Britain’s start-up funding environment has remained strong despite Brexit, attracting £6.7 billion ($9.5 billion) into U.K. tech firms in 2016. This was more than any other European country.

According to data from KPMG, on the whole, European VC funding hit a seven-year high. Optimism about the growth of tech firms in the market have been expressed by other U.S. VCs.

“We’re seeing phenomenal technical talent coming out of Europe,” Zachary Bogue, co-founder of Data Collective, said.

Fintech firm will be the next big thing

Deliberations about the future companies that could be big were also held by the VC panel. The biggest tech firms by market capitalization were very different from today, Schoendorf said while speaking about how the environment was when he first came to Davos 22 years ago. Now Apple, Alphabet, Microsoft, Amazon and Facebook take the crown.

“A new baseline for what real long-term valuations are” is being set by the the ability for these companies to reach multi-hundred-billion-dollar valuations, Schoendorf said and added that over the next 10 years, another five companies will join the ranks of these firms.

Start-ups applying new technology to established industries could be the next big firms, Bogue said.

“I think we’ll increasingly see the next five will come from companies applying the technology … applying them to real world deep vertical industries like agriculture, biotech, like digital health, like genomics,” Bogue said.

Blockchain technology would be a big deal, Jeff Schumacher, the chief executive of BCG Digital Ventures, said. Blockchain could potentially be used to disrupt a number of industries from finance to insurance and is the underlying technology of the digital currency bitcoin.

“We’ve got a really big bet on blockchain, that is some of the most disruptive technology we’ve seen since electricity. When that starts to come, I think there’s going to be a host of new models that come out of that … that’s where we probably get excited about what’s the next bet,” Schumacher said.

Schoendorf added that a fintech firm could be one of the companies to reach the level of Google or Apple.

“If I was going to pick a company that was in that five list, one of those is going to be in fintech. It’s going to have figured out how it all comes together. We are going to be sitting here with a multi-billion-dollar valuation company in that space,” Schoendorf said.

(Adapted from CNBC)


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