A study from POLIMI School of Management of Politecnico di Milano published in Research Policy 

After Brexit, London slowed down investments in Europe, while Europe continues to focus on the United Kingdom. A recent study in Research Policy, co-authored by Andrea Odille Bosio, Vincenzo Butticè and Annalisa Croce from the POLIMI School of Management of Politecnico di Milano, and Simone Signore and Andrea Crisanti of the European Investment Fund (EIF) shows these findings.

The research examined more than a decade of venture capital (VC) investments in the UK and EU, distinguishing between pre-announcement, the uncertainty period (2016 referendum to formal exit), and post-Brexit stages. The result was an asymmetric response from investors on the two sides.

Vincenzo Butticè, Professor of Business Data Analytics, said: “UK investors reacted immediately, cutting back investments in Europe after the Brexit announcement. European investors, instead, waited for greater clarity before changing their behaviour. This supports the idea that Brexit raised uncertainty in the market for financing innovative entrepreneurship.”

According to the analysis, after the 2016 referendum, UK funds drastically reduced their operations in continental Europe, maintaining a cautious approach and focusing on the domestic market. EU investors waited until after Brexit’s official implementation in 2020 before significantly boosting investments in British startups.

A ossible explanation is that EU investment growth in the UK may stem from weaker fundraising by British funds, coupled with new partnership strategies between UK and EU investors to navigate post-Brexit barriers, as indicated by the analysis of syndicated investment data from funds in both regions.

The study provides a novel perspective on the reshaping of innovation-driven capital flows across Europe and their lasting implications for the startup ecosystem. Italy, with its modest VC share, can use Brexit as an opportunity to strengthen its foothold in Europe’s investment market.

Learn more: How Brexit reshaped venture capitals market: An analysis of UK and EU investments – ScienceDirect