By Eric Auchard
LONDON (Reuters) - London's standing as Europe's leading destination for tech start-ups is at risk if the British government does not clarify how it plans to keep the best technical talent, entrepreneurs and investors have warned.
In an open letter to Prime Minister Theresa May, nine leading UK-based technology entrepreneurs and investors, including Skype co-founder Niklas Zennstrom, pressed the government to act to ensure a continued flow of skilled migrants after Britain leaves the European Union. It also called on the government to address EU market access and other issues.
"The No. 1 concern for entrepreneurs post-Brexit is access to talent, in particular technical talent," they said in the letter. It was dated Dec. 6 and timed to coincide with the annual TechCrunch Disrupt London conference for start-ups and investors.
"Quotas on specific skills could severely limit the ability of new tech companies to grow," they said.
Signatories of the letter also included Balderton Capital partner Bernard Liautaud, the now London-based founder of French software firm Business Objects, as well as Brent Hoberman of Founders Forum and Sonali De Rycker, partner at Accel Partners.
The letter calls on the government to campaign for access to the European Union's digital single market and to ensure a simple and competitive framework for companies, labor, tax, stock options and bankruptcy protection.
"London is (still) the best place in Europe to launch a global tech company," said Zennstrom, who created pioneering messaging service Skype, then venture firm Atomico, which is best known for backing Finnish video games firm Supercell.
"What the UK government needs to make sure is that technology companies still have access to the best talent in the world. If (that happens) without a lot of red tape, we are going to be fine," Zennstrom said at TechCrunch on Monday.
Paris and Berlin are vying to displace London's lead in the European start-up scene, while other cities including Dublin, Amsterdam and Frankfurt are also promoting themselves as alternative tech hubs in the face of Brexit uncertainties.
In fintech, a sector where London ranks as a global leader, funding for UK firms has slowed since Britain's vote in June to leave the EU. Germany's rival fintech scene has captured 35 percent more venture capital funding than Britain in the last two quarters, according to a report by KMPG and CBInsights.
The British government has put forward a number of initiatives to support the tech sector, such as providing funding for more fiber-optic broadband and committing to boost investment through the British Business Bank to replace potentially lost EU funding.
It has touted plans by U.S. tech giants Facebook, Google, Amazon and Apple to build new offices in London and hire thousands more staff as a measure of confidence in the UK market. But it has so far avoided making commitments to ensure a continued flow of technically skilled migrants into Britain.
"I think we are in 'deer-in-the-headlights' mode, candidly. We do not have a clue what's happening," Accel's De Rycker said during a venture capital panel discussion at TechCrunch.
European firms considering moving to London to expand quickly as global businesses now worry whether they can count on hiring the technical talent in Britain they will need to grow over the next three years, De Rycker said.
"If you want to add 100 engineers over the next two years, we are pausing on that," she said of her company's recent investment decisions. "(UK tech firms) are thinking, 'Do I need to get a second center of gravity (outside Britain)?'"
Forty percent of Accel's last 11 European investments have been in France while it has pared back on new UK firms for now, she said.
(Additional reporting by Paul Sandle; Editing by Susan Fenton)