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Here’s why European start-ups may fear ‘Brexit’

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Andrew Linscott | iStock | Getty Images Plus

Several European technology start-ups with offices or markets in the U.K. appear deeply concerned about the upcoming 'Brexit' referendum.

The U.K. referendum on leaving the European Union (EU) will take place on June 23 and is seen being close run. Among the biggest concerns preying on start-up executives' minds are how it will affect their ability to relocate staff and whether the U.K. will remain a springboard from Europe into the U.S.

Dan Rogers, co-founder of people analytics platform Peakon, which is based in Copenhagen but has an office in London, told CNBC he was concerned about how a Brexit would affect the free movement of workers.

A ground rule of the EU is the freedom of movement of goods, services and people among its 28 member countries. It is unclear whether the U.K. would hold to this if it voted to quit the EU.

"Our business really values the ability for EU nationals to be able to easily relocate to the UK (and vice-versa), so there's a definite risk there," Rogers told CNBC via email.

"Many London startups and other businesses have a huge contingent of EU nationals. British nationals made up less than half the workforce in my previous business," he later added.

Patrik Arnesson, co-founder of Football Addicts
Football Addicts
Patrik Arnesson, co-founder of Football Addicts

Not only could Brexit make it difficult for U.K. firms to hire foreign workers, it could also create barriers for British citizens looking to work in mainland Europe, Patrik Arnesson, CEO and co-founder of Swedish soccer app developer Football Addicts, told CNBC.

"I've heard a lot of talk about how Brexit campaigners want to protect British jobs from low-paid foreign workers, but it works both ways – Brexit could limit the job opportunities for talented, British people who might want to work for companies based outside the U.K.," Arnesson told CNBC in an email.

Charlotte Morris, manager for Northern Europe at language app Babbel, based in Germany, echoed these concerns.

"To operate a successful U.K. business, we need British talent here in Berlin — restricting freedom of movement damages opportunities for British people to move overseas," she told CNBC via email.

"In the event of Brexit, the legal status and right to work of the British nationals already in our Berlin team would become uncertain."

Chris Ratcliffe | Bloomberg | Getty Images

For some start-ups, the U.K. serves as a launch pad for starting U.S. operations. For instance, Swedish podcasting app Acast expanded to the U.K. in 2014 and then launched in the U.S. near the end of 2015.

"Our expansion to international markets would not have been as successful without the U.K.'s position as a major stepping-stone from the EU to the U.S. and a Brexit could seriously upset the chances of other EU-based start-ups that wish to follow this model," Acast co-founder Karl Rosander told CNBC via email.

"I think it's fair to say that most of the major European start-ups I talk to see the U.K. as the next logical step in their international expansion, but if a Brexit occurred, it would likely have a deterring effect on these sorts of plans," he added.

Meawhile, companies that are already in the U.K. may consider downsizing their operations.

"[In the event of a Brexit] we would definitely still have an office in the U.K," Rogers said. "However the size of that office could be reduced in the event that it became difficult for us to relocate EU nationals here."

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