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Expanding your business despite Brexit uncertainty

Darren Westlake | 24 October 2016 | 7 years ago

Brexit
Investors should remember the full effect of Brexit is not likely to be felt for some time
Brexit uncertainty has left some investors unconfident about backing British firms in 2016. But, for Luke Lang, Darren Westlake’s Crowdcube co-founder, it should be business as usual.

The topic of conversation has been focused on one subject since the prime minister, Theresa May, announced that the government will formally notify Brussels of its intention to leave the EU more commonly referred to as triggering Article 50 of the Lisbon Treaty by March 2017.

Yes, the B-word is on everyone’s lips, and no self-respecting party or pint down the pub is complete without a conversation about Brexit.

From the perspective of Crowdcube, it’s business as usual the UK’s investment crowdfunding market, estimated to be worth 245 million last year, is vibrant post-Brexit.

From an investment perspective, the decision to back British businesses is clear and unwavering.

From a business view, this country has a long history of entrepreneurialism and innovation. It has become one of the most exciting places in the world to start a business, with access to investment, skills and support.

But, given the uncertainty about details around trading in the EU post-Brexit, it is unsurprising that some people are starting to question whether the UK will remain a center for business.

At the same time, many small and growing businesses are questioning plans for expansion into other markets, particularly Europe, while others would be forgiven for considering upping sticks completely and relocating to another country.

it’s interesting to see that Berlin hired a bus post-referendum to promote the benefits of moving to the city, while the mayor of Paris is apparently welcoming fintech companies with open arms.

Putting plans on hold

The first thing to remember is that the full effect of Brexit is not likely to be felt for some time. The second is that growing businesses cannot and should not put their plans on hold if expansion is part of your business strategy, then it should remain so. Trust your instincts.

We are privileged to see so many smart and exciting companies expand into different markets as a result of investment through Crowdcube.

One of the most exciting businesses weve seen recently is goHenry, a digital banking solution that aims to make kids smarter at managing money than their parents.

The company raised nearly 4m on Crowdcube earlier this year, the second largest raise to date, second only to our own raise. The firm has already built up a loyal following with thousands more people joining every month.

The investment raised is being used to develop the product, but also to grow both in the UK and potentially overseas. goHenry’s target market is the 25m children in Europe and the UK that receive pocket money, but face a digital and cashless future to help them navigate the future safely and adopt good money habits.

Pavegen is another incredibly ambitious company where international expansion holds no fear. With its innovative floor tile technology that converts footsteps into electricity, Pavegen raised 1.9 million in 2015 and has since been back to raise further investment to help progress its expansion into new markets.

In the last five years, the company has transformed from a five-man team into 40 employees worldwide. This includes, most recently, expansion into the US, which founder Laurence Kemball-Cook described as not only a huge step for Pavegen, but also for the renewable energy sector spreading the message of sustainability across the globe and providing electricity when and where it is needed.

UK investment post-Brexit

it’s interesting that Laurence has also come out to talk about the perceived impact of Brexit on investment into UK companies, referencing Bill Gates recently saying the UK will become a less attractive place to do business and invest.

While international expansion is high on his priority list, Laurence is clear that Britain is where the heart of bright young entrepreneurial companies lies and it must be protected at all costs.

We can’t really talk about international expansion without mentioning Jane NI Dhulchaointigh, founder of Sugru, a huge British success story.

Sugru is the world’s first mouldable glue? a colourful putty that sticks to almost anything and turns into a strong flexible rubber overnight.

The company raised money on the platform in 2015, reaching 1m in four days and achieving a first one individual putting in a 1m stake.

Sugru has used the funding to support its expansion across Europe and the US, including a roll out of the product across 4, 000 outlets of major US retailers like Lowe’s Home Improvement and Target.

Tapping into growing DIY markets around the world and demand by consumers, the company doubled its retail presence to 10, 000 stores by the end of 2015, and generated 80 per cent of the year’s 3.4m revenues from overseas markets.

Sales are forecast to reach 5m for the current financial year, with growth of 50-100 per cent per annum for the next three years.

Sugru has sold 10m packs in more than 160 countries. Not bad for a startup, which still manufactures at its small factory in Hackney, East London.

These stories of international success make us very proud and while the real fallout from Brexit will take some time to understand, we fully expect to see more and more great British businesses seeking funding from the crowd and spreading their wings far and wide.

Luke Lang and Darren Westlake are co-founders at Crowdcube

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