Europe’s VCs Have The Brexit Blues

Almost as soon as confirmed reports of Leave’s victory over Remain started pouring in, the thinkpieces and hot takes started reacting to the doom-and-gloom future that surely awaited Britain’s financial fate. Normally, knee-jerk reporting leads to hasty conclusions – but in this particular case, the evidence seems to bear the economic alarmism out.

According to preliminary data from research firm Pitchbook via The Financial Times, the Brexit vote has caused a severe retraction in the amount of venture capital funding distributed by Europe’s rich and powerful. In the second quarter of 2015, investments totaled around $4.3 billion. However, in the three-month period ending July 1, Pitchbook’s data suggests that thanks to a long, anxious lead up to the Brexit vote and subsequent discouraging result, VC funding in Europe had precipitously fallen to $2.8 billion – nearly a third of its previous total sunk into the English Channel.

“It [Brexit] is going to have some impact,” Suranga Chandratillake, partner at UK-based Balderton Capital, told the FT. “There are big questions about access to capital … the uncertain political climate. And there’s the talent question when it is all eventually figured out if there are more severe limitations on movement.”

With so many lingering questions on the Brexit’s long-term impact, Chandratillake doesn’t paint an encouraging picture of if or when VC investments might regain their pre-vote levels. If there is any silver lining for the global entrepreneurial economy, though, it’s that VC activity in the U.S. has remained more or less stable, with $21 billion as the constant norm one at least one side of the Atlantic.