Silicon Valley Bank Releases Startup Outlook 2016

Seventh Annual Report Series Reveals Perspectives from more than 900 Startup Companies Primarily in the US, UK and China

Silicon Valley Bank (SVB), bank of the world’s most innovative companies and their investors, released its Startup Outlook report today. The report, now in its seventh year, is based on an annual survey of technology and healthcare startups that gauges their perceptions on business conditions, fundraising, hiring and public policy issues. This year’s survey included responses from more than 900 executives across the U.S., U.K. and China.

“Year after year, this survey shows us that despite challenges securing talent and funding, or uncertainty in the economy, startup founders and executives remain optimistic and committed to delivering on their mission,” said Greg Becker, President and CEO of Silicon Valley Bank.

“While the environment has changed in the first several weeks of the year, we see investors and entrepreneurs taking action to operate in an uncertain market. Entrepreneurs are focusing on profitability, slowing cash burn, and are anticipating a more balanced funding environment. They are considering M&A an even more viable exit strategy. In 2016, access to capital will get harder, but it’s not supposed to be easy and there will be opportunities for good companies with good ideas – that is healthy.”

Highlights from the U.S. survey follow and are based on 652 responses from primarily private technology companies with fewer than 50 employees and less than $10 million in annual revenue:

Business Conditions

• 64% of startups said they expect 2016 to be better than 2015, an 18 percentage point drop over the last two years

Fundraising

• 82% said the fundraising environment is somewhat or extremely challenging
• 42% of startups expect their next source of funding will come from venture capitalists
• 56% said their realistic long-term goal is to be acquired; 19% said stay private and 17% said complete an IPO
• 82% said the M&A market will stay the same or there will be more acquisitions over the next 12 months

Talent

• 95% said it is challenging to find people with the right skills to grow their business and 17% said recruiting is their biggest challenge
• 50% are hiring for engineering and technical skills
• 46% said the lack of access to talent has inhibited product development and 30% said it has inhibited revenue growth

Women in Tech Leadership

• 66% of startups had no women on their board and 46% had no women in executive positions
• 26% have programs in place to increase the number of women in leadership positions

Policy and Regulation

• Access to talent and cybersecurity are the most important public policy issues affecting these companies
• 23% said US regulations have prompted them to locate facilities or move non-sales operations outside the US

For additional survey data, including a more in-depth look at hiring and respondent views on public policy issues, please visit: www.svb.com/ieo. U.K. and China survey responses can also be found here.