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Brexit: UK tech start-ups mull uncertain future

"It's not business as usual, but we're open," Mike Laven, the chief executive of London-based global payments start-up Currency Cloud, told CNBC, highlighting the mood among the country's tech companies as they prepare for life after Brexit - and a possible end to the freedoms and benefits they enjoyed in the European Union.

The immediate fallout from Britain's decision to leave the European Union (EU) was seen in the stock market turmoil and huge fall in the pound - which had an impact on some tech firms.

Money transfer start-up TransferWise suspended trading of sterling while Currency Cloud warned customers that transactions could be slower.

TransferWise said that transfers were suspended on Thursday "in anticipation of the London currency market closing overnight" to "protect customers from rate volatility". The service reopened Friday.

'Divorce'

Aside from the immediate impact on some U.K. start-ups, most investors, lawyers and entrepreneurs are trying to digest what this means in the long-term.

"The number one problem is uncertainty," Hussein Kanji, partner at London-based venture capital (VC) firm Hoxton Ventures, told CNBC by phone on Friday.

"This is effectively going through a divorce and you don't know what is going to happen to the kid. If you're a kid and a parent gets divorced you don't know what's going on."

Britain has cemented itself as a global financial technology – or fintech – hub, producing some of the world's most innovative start-ups. This has been helped by a number of the world's major banks having massive presence in London and as well as the ability to scale across the EU thanks to regulation. Any business regulated by U.K. authorities can "passport" their products across the European Economic Area. The easy movement of workers has helped Britain as well. All of these are now in jeopardy and start-ups are concerned.

"The two main benefits of being part of the EU are access to talent because of the free movement of labor and the fact that you can 'passport' regulation - so if you're regulated in the UK, you're regulated across the EU. We don't know what's going to happen with either of those," Taavet Hinrikus, CEO and co-founder of TransferWise, told CNBC by email.

'Focus on other markets'

With Brexit on the cards, start-ups in other parts of Europe have also been put off by the prospect of expanding into Britain in the near-term. German challenger bank Number26, which is backed by the venture firm of Asia's richest man Li Ka-shing as well as Peter Thiel, said that as other European countries are more likely to be its next targets.

"It's more likely for us now to focus on other markets. The U.K. market is still interesting, but…it's not clear how regulation will play out or if we are willing to take the additional cost in entering the market," Valentin Stalf, founder and CEO of Number26, told CNBC by phone.

"It's bad for consumers, because in the end, financial innovation is less likely to be available in the U.K. The big advantage of the U.S. is that you can reach millions of consumers in one market, now 60 million in Britain are going to be out of the EU market, that's not good for European startups in general."

VC investment hit?

Even the venture capital industry has noted concern over whether investment in their funds could dry up. Kanji notes that the European Investment Fund (EIF), a provider of capital to Europe's small-and-medium-sized businesses is the single largest investor in VC funds in Europe, accounting for between 30 to 50 percent. And VCs are concerned whether they could draw back investment from U.K. funds and if international investors could do the same.

"Our greater concern is the ability for venture capital to attract institutional money. The biggest investor in venture capital in Europe is the EIF, and if they scale back investment, that could have an extraordinarily cataclysmic effect on the industry," founder of London-based VC firm Augmentum Capital, told CNBC by phone.

"There are institutions we have been talking to that were enthusiastic and committed to investing in our next fund, with the only caveat being in the unlikely event of a brexit that they will rethink. That unlikely event has happened and we will find out soon how many institutions will no longer want to back us and that is of huge concern to us."

But being a nimble set of companies, technology start-ups are confident that they'll be able to adapt within any new regulatory framework.

"This is reality now we have to deal with it," Currency Cloud's Laven said.

"It will be an additional burden in overhead, but it's just process. The U.K. will find a solution."