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By Dermot Campbell

Those with long memories may recall the panic over the so-called Millennium Bug at the turn of the century.

The theory was that, because computers would not be able to understand the concept of the year 2000, they would melt down, plunging civilisation into chaos.

Some countries spent huge sums tackling the bug. Others spent very little. In both cases, nothing happened.

All this comes to mind with the current dire warnings about the consequences of Brexit. Our aircraft will not be able to fly to European destinations, we are told. Business will grind to a halt. The wilder tales involve shortages of food and medicine.

Winners and losers

Yes, there will be losers from Brexit, possibly including financial services firms that rely on passporting rights into the European market. Leaving the EU isn’t particularly good news for those trying to sell London property either.

Brexit is expected to hit the London housing market

But there will be winners as well, such as the nimble and fleet-footed smaller businesses that will be the backbone of the post-Brexit economy. For them, and I write as one who voted Remain, Brexit is likely to prove somewhere between irrelevant and genuinely positive.

An upbeat mood prevails among businesses seeking financing, such as through the Enterprise Investment Scheme (EIS) and the Seed Enterprise Investment Scheme (SEIS). That is not surprising, as this market finds itself in a “sweet spot”, in which businesses are seeking investors and investors are looking for growth opportunities.

Indeed, a virtuous circle is in operation. Reforms to EIS and SEIS in Chancellor Philip Hammond’s Autumn 2017 Budget cleared out the structured tax avoidance schemes that had previously taken advantage of tax efficiencies and helped the two schemes to metamorphose into vehicles for proper venture investment.

Higher-quality investments

The headline figures for money raised may be a little lower than at the time of the June 2016 referendum vote, because at that time a wall of money was heading into asset-backed schemes involving renewable energy and other ventures.

But the quality of today’s investment is, in the absence of the avoidance schemes, very much higher. The result is that, for businesses seeking genuine risk capital, it is almost certainly a lot easier to raise money now than in 2016.

The right types of business

If that is one part of the virtuous circle, another is that growing businesses offer the sort of opportunities to investors that will appear increasingly attractive in the post-Brexit climate. These are the types of firms that are well-placed to flourish after Brexit, for a number of reasons.

One, they tend to operate in very specific areas of activity, quite often specialising in their niche. That gives some protection against any adverse Brexit.

Two, they are agile and able to adapt quickly, in contrast to corporate giants.

Three, on a similar theme, smaller firms can transform themselves much more quickly than larger businesses, should circumstances demand it. If there are problems selling the type of widget currently emerging from their workshop, they can start producing a different type without too much trouble.