Reporter with Silicon Hills News
It has been an almost surrealistic couple of weeks for Fred Schmidt. First, the director of international for Capital Factory learned from the British Consulate in Houston that he had been named a Most Excellent Member of the British Empire for his services to U.K.-U.S. relations, a royal honor which includes a ceremony at Buckingham Palace.
“This is the award the Beatles received in 1965,” he explains passionately, still clearly overwhelmed. “I am unworthy.”
Next, Schmidt led an Austin delegation on a trade mission to London Tech Week—the kind of thing that got him the award in the first place. For years he’s been working to build bridges between Austin and Hackney—London’s tech borough—so that British entrepreneurs could make Austin their launch point into the U.S. market and Austin entrepreneurs could use Hackney as their entrée into the European market. He had just announced the formation of the Austin chapter of Tech London Advocates, an international group that supports London’s tech growth and moves Austin into a wider playing field beyond Hackney, when suddenly and unexpectedly, Brexit happened. Great Britain voted by a narrow margin to leave the European Union, prompting everyone inside the tech world and out of it to ask “Now what?”
What Brexit Means for U.S. Entrepreneurs
If Great Britain is no longer part of the E.U., does that mean that launching an office there locks a company into U.K.’s borders rather than providing a portal into Europe as a whole? What will the new trade, employment and other agreements comprise? How will this impact financial agreements? No one knows and the uncertainty has proved costly. The British stock market dropped 3.2 percent by late Friday, the British pound slid 7.6 percent against the U.S. dollar.
Anecdotally, many investors have backed off of deals until the dust clears.
Tech growth has outpaced the rest of the U.K. economy by more than 30 percent. London is a financial hub for Europe and prolific center for fintech. It has always been a logical place for U.S. companies to begin European expansion because of the close ties between the U.S. and U.K and the common language. But if England will no more be part of the EU, what becomes of all the relationships Austin and London have been cultivating? If the U.K. actually does exit the EU, it will have to renegotiate all its trade and other agreements with the rest of Europe and be in a position to create its own trade agreements with the U.S. Schmidt believes this could ultimately be a great thing for both U.S. and U.K. entrepreneurship. He describes E.U. as a behemoth, created over generations and weighed down by bureaucracy.
But in the short term, Schmidt said, he may use his “backup plan,” diverting Austin-based entrepreneurs to Dublin which has a tighter relationship with the E.U. and a similarly symbiotic relationship with Austin. Capital Factory already has a reciprocal arrangement with Gravity Hub, a new incubator/co-working and event space in Dublin.
“The Austin-London-Dublin relationship has built great momentum in recent years and this gives our members and community a broad set of options to leverage talent, funding and expertise in all three cities, regardless of the changes that may come down the line,” said Cian O’Cuilleanain, co-founder of Gravity Hub. “As tech entrepreneurs building global businesses we don’t shy away from running the gauntlet of change, whether that’s via the market or the political process.”
Austin Chapter of Tech London AdvocatesSchmidt says Austin is still full-steam-ahead on its relationship with Tech London Advocates. While Austin’s original bid in London was to partner with the borough of Hackney, companies like Whole Foods, Homeaway, Dell, Spredfast and Indeed have set up headquarters outside of Hackney.
“We thought, ‘Why don’t we take the tech portion of Austin-Hackney United and start to add some more people from these other companies?” said Schmidt, interviewed from London. “Why don’t we stand this thing up with some really important people who qualify in terms of their backgrounds and wrap our heads around the whole of the opportunity over here?”
Among the new members of Austin TLA are Fabio Torlini, head of EMEA for WP Engine, Whurley (William Hurley), former Founder of Honest Dollar and now Managing Director at Goldman Sachs, and Jim Kendall, Chief Technologist at the Michael and Susan Dell Foundation. But Schmidt, who will head the Austin chapter, said he expects it to soon be the largest chapter outside of the U.K.
During Tech Week, the City of Austin Economic Development Department and Capital Factory announced a new, one-year pilot program to expand on Capital Factory’s Touchdown Austin program for international entrepreneurs. The program targets 20 international cities and 7 market sectors. The initial fund is for $45,000 to help support six-to-eight companies for three-to-six months while they establish themselves in the U.S., based in Austin. The program will establish reciprocal arrangements in qualifying cities for U.S. entrepreneurs seeking to expand in global markets.
In the meantime, Schmidt has to decide whether he’d like to receive his MBE honor at New Year’s or on the Queen’s birthday next June. He can work it out….