British tech startups are increasingly gloomy as Brexit approaches, and it's already hurting their ability to hire talent

Jeff J Mitchell / Getty

Anti-Brexit campaigners.

• British tech founders have had a rough 12 months thanks to continuing confusion about Brexit.
• Founders reported being able to attract less international talent over the last year.
• UK founders are also more pessimistic about the future of tech than founders from other regions.
• London is still number one for cash going to startups and the number of deals, but overseas founders may choose to stay put as the UK puts up barriers.

British tech startups continue to feel the effects of Brexit, attracting less international talent over the past 12 months and feeling greater pessimism.

According to a survey of 5,000 tech workers by VC firm Atomico, most European startups outside the UK managed to attract more overseas talent to their businesses, or maintain the same levels. But UK founders saw a decrease.

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The yellow bar on the chart below shows the percentage of UK respondents seeing a decrease in international tech talent. Note how the UK's black bar is much bigger than other regions:

Atomico/The State of European Tech Survey

Likewise, UK venture-backed startups saw a considerable increase in talent choosing to move abroad. The green bar on the chart below indicates the increase in talent leaving the country:

Atomico/State of European Tech Survey

It isn't all bad news for the UK, and Brexit impacts remain negligible. London is still Europe's biggest tech city in terms of capital raised and the number of startup deals, with Berlin and Paris still some way behind. Oxford and Cambridge also feature in Atomico's list of top 20 hubs by capital raised and number of deals.

Read more: How Brexit killed an entrepreneur's vision to invest in British tech talent

But, Atomico found, startup founders are feeling pretty pessimistic. Here's a chart showing that the UK is the least optimistic region in Europe about tech:

Atomico

Atomico partner Tom Wehmeier told Business Insider that the UK has historically been highly dependent on foreign talent for tech.

Quite apart from Brexit, he added, London was being challenged by the fact that other cities, which have been poor at retaining tech talent are now looking more attractive, thanks to capital flowing throughout Europe, and stronger local tech communities. Entrepreneurs, he said, are choosing to stay among their own networks rather than head abroad.

"We're going from a period where the opportunity within the tech industry was historically concentrated geographically. The UK was one of those places, there has been more opportunity than anywhere else and it was a destination of choice," he said. "That opportunity, which was once geographically concentrated, is more spread through the region."

Brexit, he added, was a "compounding factor."