On the 23rd June, the people of Britain voted to leave the EU. Four months has passed since the vote that will undoubtedly create a seismic shift in the political, social and economic landscape of the United Kingdom. Article 50 hasn’t been triggered yet, but the fallout of Brexit has already been felt by start-ups across the country.
Amongst start-up companies, shock, disbelief and disappointment were common sentiments among them in the days following the outcome of the vote.
At the time, uncertainty was the prevailing feeling. No one could predict what the outcome of Brexit would mean for their company.
Four months on and at this point we are still seeing a lot of uncertainty as to what Brexit will actually mean for software start-ups.
The immediate change has been the rapid devaluation of the pound. On the one hand, international investors see this as a positive as they get more bang for their buck. However the weakened pound also means start-ups now are paying higher fees for critical services they receive from abroad. Such services include AWS, Google Cloud, Salesforce and Azure.
One area that has been affected is sales. International customers mainly from the USA have indicated concern as to the long term viability of a start-up operating within an unstable political or economic environment.
My company provides software escrow services to companies around the world.
Software escrow is an arrangement where a 3rd party software escrow agent secures the source code on behalf of the developer and the end user. In the event that the Developer is unable to support the software usually due to going out of business, the end user may apply to receive the source code to allow them to continue to maintain the software application.
Over the past few weeks, we have seen a dramatic increase in demand for software escrow agreements from companies in the USA who have licensed software from UK start-ups. These USA companies are seriously concerned that their vendor may not be able to survive the eventual fallout of Brexit (whatever that may be).
Is this fear irrational or justified?
No-one really knows what ‘Brexit means Brexit’ actually means, or knows what the real effects will ultimately be.
It is understandable from someone sitting in the USA watching the British pound fall by 20% to become nervous as to what other unstable economic, political or social outcomes may be.
From the perspective of the software start-ups, they feel that the Brexit concern is unwarranted however they overwhelmingly understand that they are in a weaker position and agree to put measures in place to make their clients feel more comfortable.
Escrow London is the UK’s leading private software escrow provider servicing hundreds of companies in the UK, USA, UAE and Africa. Escrow London has the expertise and years of experience in providing cost effective bespoke and flexible software escrow agreements.
Phone: +44(0) 20 3862 0380
Find us at: www.escrowlondon.co.uk