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 Four years later, the 38-year-old entrepreneur has a half-dozen
engineering vacancies that he says haven't been filled for nearly a
year because of a local shortage of top-tier programmers.
Immigration restrictions, he says, have made it harder to tap into
the global pool of talent, costing his 7-year-old startup, MUBI,
subscribers and revenue.
"We're ready to grow, but without the right workers, we just can't
expand," he said.
Tech entrepreneurs say Cakarel’s experience reflects a broader
problem facing London, Europe’s startup hub and an engine of
innovative growth. To compete globally, its tech firms need to
import talent. But young firms say nationwide curbs on immigration
have put constraints on their ability to hire.
One study has found migrants are behind one in seven companies in
the UK. The European Commission has said almost half a million tech
vacancies may come up in Europe next year and job websites advertise
tens of thousands of tech vacancies in Britain, pointing to a
bottleneck of talented people from around the globe.
At the same time, cities from Toronto to Sydney are boosting efforts
to open their doors to skilled migrants, particularly in the
strategic tech sector. TechUK, an industry lobby group, earlier this
week called for smarter policies to attract more talent. "There are
an incredible number of city-led initiatives worldwide to highlight
the effect migration has on cities," said Kim Turner of the
Toronto-based Maytree Project, an immigration think tank.
Entrepreneurs say Australia, New Zealand, Canada, Chile and Germany
are some of the national governments that are best responding to the
need to attract high-skilled migrants.
London’s situation highlights the mounting tension between the needs
of city business and the political mood in the country at large.
More than many, the city's efforts to stay competitive set it
against public opinion and the national government.
As in other European economies which have struggled to create jobs
since the 2008 financial crisis, migration is a growing concern in
Britain. This was crystallized in May when the anti-immigrant UK
Independence Party (UKIP) won the biggest share of the vote in
European Parliament polls. Its rise has pushed both major parties to
toughen their stance on immigration ahead of May 2015 elections.
Prime Minister David Cameron has promised to reduce net migration to
the "tens of thousands" from 212,000 in 2013 and recently
accompanied law enforcement on a raid on suspected illegal
immigrants before holding a press conference in the suspects' home.
"It is nonsense to suggest our policies prevent companies appointing
the skilled workers they need - the number of skilled people coming
to work in the UK was up 16 percent last year," a government
spokesman said. "The UK is open for business to the brightest and
best migrants and remains an attractive destination for global
talent.”
Still, some in the tech community, higher education and other
sectors that rely on migrants say gestures like Cameron's send the
wrong message overseas, and risk harming Britain's competitiveness
in the long term.
"The Prime Minister's net migration target is kind of meaningless,
or arbitrary in the sense that you have a target that isn't aligned
to any economic plan, it's just about numbers," Mark Hilton of
London First, the city's lobbying arm, said.
"When you see the way the UK government talks about immigration and
how that's picked up in the foreign press ... you risk making London
look less welcoming to foreign talent."
VISA QUOTA
Cakarel came from Palo Alto, California in 2010 and describes MUBI,
an online service which offers one movie a day, as "a curated
selection that gets rid of the paradox of choice." Its subscriber
base is now growing at 3 percent a week, but he brought it to Europe
to avoid being eclipsed by Netflix, Hulu and other big players.
"We knew that Europe would be our target market, so London was the
natural choice," he said in a Soho office reminiscent of a rich
kid's dorm room, with a skateboard mounted over the fireplace, a
low-slung couch facing a flat-screen TV, and an Apple Mac humming in
the corner.
Financially well-off and with a business degree from Stanford
University, Cakarel came in on one of Britain’s special visas for
the highly skilled, which didn't require a company to sponsor him so
he could set up shop.
The firm dipped into the 5 million pounds ($8 million) it had raised
mostly from U.S. venture capitalists to cover rent, salaries, and
taxes in Britain. But as it was growing, Britain’s national
immigration debate was heating up.
Like every European Union country, Britain is obliged to keep its
borders open to most Europeans, who make up the majority of
immigrants. So after the financial crisis hit jobs, the government
tried to crack down on migrants from outside Europe.
In 2012, it stopped issuing the highly skilled visa that brought
Cakarel to Britain, as well as one known as a Tier 1 post-study work
visa, which allowed foreign students at British universities to work
for a time after graduating.
Cakarel and others were baffled. "The fact that such an attractive,
well-crafted process to get some highly educated, highly skilled
people into this country is for some inexplicable reason gone, that
doesn't make sense to me," he said.
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Following an outcry from the tech community, a Tier 1 "exceptional
talent" visa was established in April to attract the most promising
minds in tech.
But it has a quota of 200 a year. The number of London firms seeking
workers suggests that will not be enough: There are nearly 1,000
startups in the city and a tenth of them are hiring, according to
startup website Angel List.
Startups aren’t the only ones. The lean young operations of "Silicon
Roundabout" in east London have to compete with the City's
deep-pocketed banks and multinationals, whose staff and lawyers are
skilled at navigating the immigration system.
"A lot of these startups gain traction and build momentum, moving
from the 'startup' to the 'scale-up' stage quite quickly," said
Russell Shaw of Tech London Advocates. "But that means they need to
hire more talent quickly, and the current system makes it hard to do
that."
OBSTACLES TO SCALING
Immigration lawyers say the visa clampdown means startups can only
either hire within the European Economic Area, or tackle mighty
bureaucratic hurdles and legal fees.
“One of the questions I get from investors is ‘what’re the obstacles
to scaling this business?’” said Ed Bussey, founder of Quill, a
digital content provider. “It’s not the tech, or a shortage of
clients. The challenge is a shortage of high quality staff, and I’m
hearing this from many of my peers across the digital tech sector in
London.”
His startup, founded and based in London, is eager to hire after
raising $5 million in March. It is trying to add a dozen more to its
20-person team. Those vacancies remain unfilled, in part because
Bussey hopes to find a local developer for web application framework
Ruby on Rails.
“It would be a lot simpler to have people within the home market.
The long-term solution is we’ve got to address the training and
development issue around this sector,” Bussey said. “But I can’t
wait 10 years. We need people, and I want to be able to hire the
best people out of Silicon Valley.”
A May analysis by social network LinkedIn of where its members were
relocating for work showed the top cities attracting workers with
tech skills are in India, the United States and Australia. Berlin,
Montreal, and Toronto also beat London. Even the United States,
which is in the middle of its own immigration debate, retains
equivalents of Britain’s highly skilled and post-study visas, which
London firms say would boost hiring.
LONDON VS BRITAIN
Anti-immigrant sentiment in Britain is nothing new, but politicians
are playing on it more than in the past. More people in Britain than
in several comparable countries rank immigration as the single most
important issue facing their country, said a July report by the
Oxford University Migration Observatory.
Against that backdrop, few politicians from the major parties will
say restrictions go too far.
“Businesses like ours who are carrying vacancies, are caught in the
crossfire of a very sadistic debate,” Bussey said. “The tone of the
debate in the media is about 'how do we get the numbers down?' I’m
not saying these are not legitimate questions, but it’s taking a
very polarized view that hurts companies.”
Shoreditch, the district which houses tech hub Silicon Roundabout,
is “achingly cool, but it’s also achingly poor,” said local member
of parliament Meg Hillier, who hopes tech skills will boost her
constituency.
“We’re a way off having enough (British) people with the right
qualifications and experience,” she said. “In the meantime we should
embrace the migrants who have so much to contribute. If we don’t,
London will lose its edge and even the government might rue its
uncompromising anti-immigration messages.”
The government is responding. In a bid to help companies and build
bridges, lobby group Tech London Advocates holds occasional "Home
Office Hours" where government officials help tech firms navigate
the paperwork needed to sponsor an employee.
"Look, it's all about people, people make things happen," said
MUBI’s Cakarel. "If you have the right policies in place to keep the
talent, that country is going to do well. If you don't, then talent
is going to go somewhere else."
(Edited by Sara Ledwith)
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