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Brexit could spur UK to produce multi-hundred-billion tech start-up, top VCs say

Brexit could boost the U.K.'s ability to create the next several-hundred-billion-dollar technology firm, according to a top Silicon Valley venture capitalist and former Apple executive.

Last year, Britain voted in a referendum to leave the European Union and on Tuesday, U.K. Prime Minister Theresa May gave a speech suggesting that any deal reached with European lawmakers will be put to a parliamentary vote.

It's unclear how this could play out, but May said that Britain would leave the single market. Joe Schoendorf, a VC at Accel, said getting rid of EU regulation could help the country's start-up sector grow bigger.

"I think if you had to pick one country to invest in Europe today, you'd pick Great Britain … and the reason you'd do it is because of Brexit. One of the things that the U.S. government has been really good at … is leaving Silicon Valley mostly alone," Schoendorf said during a panel discussion at a CNBC-hosted event.

"Government regulation and free enterprise and start-ups trying to be something are pretty incompatible. And so with Brexit and Great Britain pulling the EU out of the loop, I think you will be surprised with the momentum with that sector in particular."

From left to right: Joe Schoendorf, partner at Accel, Zachary Bogue, co-founder of Data Collective, and Jeff Schumacher, CEO of BCG Digital Ventures.
Lee Thomson | CNBC
From left to right: Joe Schoendorf, partner at Accel, Zachary Bogue, co-founder of Data Collective, and Jeff Schumacher, CEO of BCG Digital Ventures.

Britain's start-up funding environment has remained strong despite Brexit, attracting £6.7 billion ($9.5 billion) into U.K. tech firms in 2016, according to London & Partners, a promotional firm for the Mayor of London's office, citing data from PitchBook. This was more than any other European country.

On the whole, European VC funding hit a seven-year high, according to data from KPMG. Other U.S. VCs were optimistic about the growth of tech firms in the market.

"We're seeing phenomenal technical talent coming out of Europe," Zachary Bogue, co-founder of Data Collective, said during the CNBC panel.

Fintech firm will be the next big thing

The VC panel also deliberated about the future companies that could be big. Schoendorf spoke about how when he first came to Davos 22 years ago, the biggest tech firms by market capitalization were very different from today. Now Apple, Alphabet, Microsoft, Amazon and Facebook take the crown.

Schoendorf said that the ability for these companies to reach multi-hundred-billion-dollar valuations has "set a new baseline for what real long-term valuations are" and said another five companies will join the ranks of these firms over the next 10 years.

Bogue said the next big firms could come from start-ups applying new technology to established industries.

"I think we'll increasingly see the next five will come from companies applying the technology … applying them to real world deep vertical industries like agriculture, biotech, like digital health, like genomics," Bogue said.

Jeff Schumacher, the chief executive of BCG Digital Ventures, said blockchain technology would be a big deal. Blockchain is the underlying technology of the digital currency bitcoin, which could potentially be used to disrupt a number of industries from finance to insurance.

"We've got a really big bet on blockchain, that is some of the most disruptive technology we've seen since electricity. When that starts to come, I think there's going to be a host of new models that come out of that … that's where we probably get excited about what's the next bet," Schumacher said.

Schoendorf added that a fintech firm could be one of the companies to reach the level of Google or Apple.

"If I was going to pick a company that was in that five list, one of those is going to be in fintech. It's going to have figured out how it all comes together. We are going to be sitting here with a multi-billion-dollar valuation company in that space," Schoendorf told CNBC.


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