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How Brexit will affect circular economy startups

Union Jack hanging at a house with neon sign sying "quo vadis"

As it seems for now, the last act of the Brexit drama has not even been written yet! Whatever happens, sure is, it will definitely affect the European economy. But how does it affect startups? Will there be a happy ending or a tragic ending for circular economy startups operating in the UK?

Seizing Opportunities of Brexit

One of these startups that will have to face the consequences of Brexit for its business at some time in the future, is Green Alley Award 2015 winner Adaptavate. The company based in Gloucestershire, South West England, develops the next generation of bio composite materials for the construction industry and is definitely on a growth course: they launched a second and third product, hired new staff and lately entered the Benelux market. Brexit might cast long shadows on this success story. Nevertheless, Adaptavate founder and managing director Tom Robinson does not let Brexit darken the future of his business: “Brexit is pretty difficult to plan for in all honesty, as we don’t really know what we are planning for! I have always believed that in chaos comes opportunities and that is how we are approaching this challenge. Let’s face it, as circular economy startups, we are constantly overcoming challenges, and this is just another one.”

Facing the uncertainty that comes with Brexit, some entrepreneurs are either moving out of the UK or even refrain from starting a business there, while others are looking at ways to maximize their growth against all odds and focus on opportunities. This is also Tom’s strategy for his startup Adaptavate: “Strategically we have broadened our horizons to search for joint ventures and licence partners in markets other than the UK and Europe.” Tom’s view may also show what kind of opportunities can be derived from a dooming Brexit. It widens the entrepreneurial scope to markets that you might not have considered otherwise and opens up new chances for making business. “Brexit has encouraged us to look at other markets that have less barriers to entry, fewer competitors, greater dire towards perforce/sustainable building materials and this has been a really positive move that has really developed our company”, says Tom Robinson. “We are still working on relationships with Europe that we have worked on over the last four to five years, but we are also spreading our risk to look at other territories.”

The startup DNA is global

In the end it seems that successful startups do not even need to fear market changes, because they are much more agile and flexible than established companies. Their mindset is not national but global. Therefore, they can and will adapt much quicker to the post Brexit era. The Brexit scenario is only pushing them into the right direction, as Tom Robinson confirms: “After all, when you have a technology that has a global potential, the best go-to market may not always be on your back doorstep. However, we hope that the clarity that will come with the passage of time will enable us to put in place firmer plans in Europe in the near future.”

But what about startups outside the UK with business ties to the British market? How will they manage? According to a survey by the DIHK, 70 % of German companies expect their business with the UK to deteriorate in 2019. Most companies fear additional customs bureaucracy, higher costs for customs duties and import taxes as well as legal uncertainty. This fear is shared by the German startup Superseven, Green Alley Award finalist and winner of the Seedmatch Crowd Award 2019. “We source material from the UK and have customers there. This means that Brexit affects us directly. However, we are trying to face the exit date calmly”, says Sven Seevers, Managing Partner at Superseven. However, the startup hopes for the best possible outcome: an agreement on a Brexit deal with the European Union or a postponement of the withdrawal. So, everyone seems to hope for some catharsis in this drama – let’s see what the future brings.

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