But no-deal is only one scenario. No one can say for certain what Brexit's impact on business in the UK would be, should it happen. But if these possibilities alone are causing this much disruption and concern among businesses generating billions in revenue, how on earth must the new crop of startups looking to secure funding feel?
At a fund level, the disappearance of historic LPs paints a bleak picture. The European Investment Fund's annual report for 2017, for example, showed that it backed only three UK venture funds that year, compared with 20 in 2016. Meanwhile, PitchBook data also highlights that the number of UK venture funds being closed in the UK has shrunk in the last two years compared with 2015 and 2016 levels. If this persists, the pot could be relatively empty for startups looking for growth capital.
In the short term, however, UK startups can take heart in the money that is currently available. This isn't just limited to UK-based investors, either, as several non-British backers have kept their interest in British startups up even since the referendum in 2016. According to PitchBook data, although overall deal numbers stumbled in 2018, the amount of capital invested in 2017 and 2018 topped €6.5 billion each year. The closest number to that previously was 2015's €5.79 billion.
These bigger funding numbers suggest that, for now, VCs are willing and able to invest in startups in the UK. This is particularly true for businesses that are reaching the stage for scaling globally, such as Deliveroo, which raised a mind-boggling $480 million Series F across two rounds at the end of 2017. On top of this, UK-based LPs are keen to step up as outside commitments look set to fall. The British Business Bank, for example, announced the setting up of a £2.5 billion capital pool for investment venture firms.
Another factor likely to keep startup funding flowing is VCs wanting for access to talent. While the brain drain will have some effect, the UK's collection of top education centers will still hold weight. According to the latest PitchBook Universities report, for example, both the London Business School (tied for 11th) and the University of Oxford (14th) come in the top 20 MBA programs in terms of VC money raised. Startups emerging with founders from these schools include Adaptimmune Therapeutics, Off Grid Electric and Quipper.
For established startups in the UK, then, the ongoing private market capital glut belies the idea that the upcoming threat of Brexit is impacting venture funding availability. However, with long-standing LPs such as the EIF turning off the taps, how long this will last is up in the air, leaving the future for the next generation of UK businesses wanting to scale unclear.
For more on fundraising in Europe, check out our 2018 Annual European Venture Report.