What does leaving the EU’s Digital Single Market mean for UK startups?
What does leaving the EU’s Digital Single Market (DMS) mean for UK startups? No one actually knows. That’s why three UK VCs are backing an initiative to assess the impact of what leaving the DSM could mean for UK tech startups, if, as is predicted, the UK does leave the EU next year.
UK Prime Minister Theresa May previously announced the UK will be leaving the DSM when it formally leaves the EU next year, but, according to sources who spoke to TechCrunch, no industry consultation took place on this decision.
The idea behind the DSM, launched in May 2015 and heavily backed by the UK Government at the time, was to tear down regulatory walls and move from 28 national ‘digital’ markets to a single one. The prediction was that this would contribute €415 billion per year to the EU’s economy and create hundreds of thousands of new jobs.
It’s been made one of the European Commission’s 10 political priorities and is made up of three policy pillars, as outlined below:
1. Improving access to digital goods and services
The Digital Single Market strategy seeks to ensure better access for consumers and business to online goods and services across Europe, for example by removing barriers to cross-border e-commerce and access to online content while increasing consumer protection.
2. An environment where digital networks and services can prosper
The Digital Single Market aims to create the right environment for digital networks and services by providing high-speed, secure and trustworthy infrastructures and services supported by the right regulatory conditions. Key concerns include cybersecurity, data protection/e-privacy, and the fairness and transparency of online platforms.
3. Digital as a driver for growth
The Digital Single Market Strategy aims at maximising the growth potential of the European Digital Economy, so that every European can fully enjoy its benefits – notably by enhancing digital skills, which are essential for an inclusive digital society.
Meanwhile, Tech For UK is a new group which has been formed by over 100 UK tech industry leaders to back a ‘people’s vote’ on the terms of Brexit, which an option to remain in the EU. It’s currently canvassing for new supporters.
The group boasts a string of high-profile business leaders from the tech sector, including Martha Lane-Fox, best-known as the co-founder of Lastminute.com, Giles Andrews, one of the founders of peer-to-peer lending pioneer Zopa, and George Bevis, the CEO of Tide Bank. It also features leading venture capital and private equity investors, such as Simon Murdoch, the managing partner of Episode 1 Ventures.
The group says the loss of access to European LP funds like the European Investment Fund, the flight of talent which powers UK tech companies due to the uncertainty and scandal around immigration, plus the loss of access to the DSM are adversely affecting the UK tech industry.