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2020 GlobalStartup OutlookKey insights from the Silicon Valley BankStartup Outlook Survey
PERSPECTIVE FROM SVB’S CEOSTARTUP OUTLOOK 20202Startups see bright conditions in 2020Silicon Valley Bank is pleased to present our 11th annual Startup Outlook Report,capturing entrepreneurs’ perspectives on the health of the innovation economy.For our 2020 report, we drew on 1,100 responses from technology and healthcarefounders and executives based in the US, the UK, China and Canada.The headline. Two-thirds of these entrepreneurs tell us they expect businessconditions to improve in 2020, underscoring the resiliency of the innovationsector. This level of confidence has essentially remained unchanged over the pastfew annual surveys, even in the face of shifting economic and political headwindsand increasing scrutiny of the tech sector.The 2020 results underscore a few key themes. There’s rarely been a better timeto be an entrepreneur; almost all are planning to hire, and most of those whoare attempting to raise capital report that they are successful. In many ways,technology has reduced the cost of entry, allowing companies to more quickly solvefor product-market fit or move on.But there’s another part to the story. As technology becomes embedded in nearlyeverything we do, the debates grow louder over who should have access to techjobs and why most leadership roles still go to white males. Front and center now atthe highest levels of many governments are discussions about how to handle dataprivacy and cybersecurity issues. And more than ever, we are all talking about thereal-world impacts of the technology revolution.Entrepreneurs are not ones to shy away from tough problems; in fact, they thriveon the pursuit of solutions. We do this report every year with the goal of helpingstartups, policymakers and the public understand what drives the innovationeconomy, and we hope you find useful information that can help you succeed in2020. Let us know what you think.Greg BeckerCEO, Silicon Valley Bank
STARTUP OUTLOOK 2020Two-thirdsof startupssay 2020 willbe betterThe innovation economycontinuously adapts to change,and entrepreneurs are optimisticby nature. Despite the dramaticpolitical and economic transitionsunder way, startups consistentlyshare a positive forecast forimproving business conditions.In addition, 79% of startups planto hire in 2020, underscoring theircritical role as job creators.3Describe your outlook for business conditions foryour company in the coming year.Will be better2020Will be the same67%201963%201865%Percentage that plan to hire202079%201977%201876%Will be worse24%28%30%9%9%5%
STARTUP OUTLOOK 2020Capitalabounds, butit’s not easyto accessWhile there is no shortage ofinvestors, they are increasinglyselective about how and when toinvest. Just 12% of startups sayit’s getting easier to raise funding,while 41% say it is getting harder.Even so, for those startups thatsought capital in 2019, all but11% were successful, and 56%said they raised their most recentround in less than six months.What is your view of the current fundraisingenvironment for companies like �� As an early-stage, diverse (with women and minority co-founders)medtech company, access to pre–Series A and A financingis a monumental challenge.” Co-founder, US medical device company4
STARTUP OUTLOOK 2020Startupcapital comesfrom manysourcesWith the rise of non-traditionalsources of capital, startups reportthat they are tapping a variety offunders. Venture capital, however,was still the top source for thosethat recently raised capital.If you raised private capital in 2019, what was the primarysource of ndsand family12%Other**Other includes seed venture firm, accelerator/incubator, government grant, bank debt, crowdfunding, ICO and IPO.5
STARTUP OUTLOOK 2020Venturecapital stilldominatesWhat do you expect your next source of funding to be?36%Startups again expect venturecapital to be their next sourceof funding. Interestingly, 12%of startups do not plan to raisemoney in the near future but toinstead rely on organic growth.8% 7%4% 4% 4% 4%*Other includes accelerator/incubator, crowdfunding, merger, government grant, IPO and ICO.Other*10%11%VenOrca turepitno ganialcne gred owfor thfun —dventu Co sre rpoinv raes debtAngelgrouSepedventurefirm12%6
STARTUP OUTLOOK 2020Most startupsexpect tobe acquiredWhile headlines both trumpet andcriticize recent IPOs, the fact ismost entrepreneurs never expectto reach a public market exit(except in China, where an IPO istypically the top goal). And in thisenvironment, it’s sometimes hardto pinpoint a long-term goal.7What is the realistic long-term goal for your company?Be acquiredGo publicvia an IPORemainprivateDon’t know/prefer not to %21%16%19%20%4%
STARTUP OUTLOOK 2020Accessto talent istop publicpolicy issueWhat are the three most important public policy issuesaffecting companies like yours?50%Finding skilled talent is a topconcern in many innovation hubs.Access to talent(immigrationand CorporatetaxesInternationaltrade“ Talent ‘wars’ continueto drive up costsand make scalingmore difficult.” P of finance,VUS cybersecurity company“ Cybersecurity and data sovereignty need to be addressed systematicallyby Canada for us to just maintain our standing in the world.”Executive, Canadian tech company8
STARTUP OUTLOOK 2020Many startupssay hiring isgetting harderLow unemployment rates, competitionfor top talent, stiffer immigration rulesand the high cost of living in globaltech hubs combine to make hiringtalent difficult. Demand is highest fordevelopment and R&D roles.“ Access to EU talent andbeing a welcoming place arekey for the UK to remaina technology leader.” P of finance,VUK cybersecurity company“ We should be open toeducating everyone, andtalented people should beallowed to stay and workin the US.”Co-founder, US fintech companyHow would you describe the hiring environmentcompared with last year?45%39%16%HarderNo changeEasierWhat are the top three skills you are hiring for?Productdevelopment/R&DSalesTechnical64%54%53%9
STARTUP OUTLOOK 2020Entrepreneurshipknows noboundariesStartups with at least one foreign-born founder:Entrepreneurs hail from countriesall over the world, bringing their ideasto innovation hubs in the US, the UKand Canada. Half of startups in thosethree countries have at least oneforeign-born founder.52%US“ Bring back USentrepreneur visasfor founders.”CEO, US AI company53%UK52%Canada10
STARTUP OUTLOOK 2020Are womenmaking itinto startupleadership?Industry leaders and individualcompanies are increasingawareness and efforts to improvefemale representation in techleadership, but the gap to reachgender parity remains wide.SVB will publish an in-depth reporton Women in US TechnologyLeadership in H1 2020.43%have at least one female C-suite executive42%have at least one female board member11
STARTUP OUTLOOK 2020How areethnicand racialminoritiesrepresentedin startupleadership?For the first time, we askedstartups in the US, the UKand Canada about ethnicand racial minorities* inleadership positions.42%have at least one C-suite executivewho is ethnically or racially diverse44%have at least one board memberwho is ethnically or racially diverse* Ethnic and racial minorities are defined as:US: Black/African American, Hispanic, Asian/Pacific Islander, American Indian and Alaskan Native.UK: Black/African/Caribbean or Asian.Canada: Visible Minority or Indigenous/Aboriginal. Visible Minority is defined by Canada’s Employment Equity Actas “persons, other than Aboriginal people, who are non-Caucasian in race or non-white in colour.”12
STARTUP OUTLOOK 2020What arestartups doingto encouragea diverseworkforce?We asked startups in the US, the UKand Canada what kinds of programsthey have to increase diversity. While43% say they have companywidepromotion and hiring goals, fewerthan one in five has these goalsspecifically for C-level positions.About one-third have board memberdiversity goals.Does your company have any programs to increasediverse representation in leadership?26%55%19%YesNoDon’t know/prefer notto sayWhat types of programs do you have in place?58%58%Flexible ues48%45%43%Leadershipdevelopmentand tablishingpromotion/hiring goalscompanywide“ Make it easier forinjustices to becorrected and penalizeVCs and boards forpoor diversity.” EO, US consumerCinternet company13
STARTUP OUTLOOK 202014About the Startup Outlook SurveyOur annual survey offers insights into what is on the minds of technology and healthcare startup leaders. For the 2020 report,we conducted the survey in October and November 2019 and received responses from startup executives in innovation hubsprimarily in the US, the UK, Canada and China.TotalrespondentsIndustry sectorSize69% 17% 14%Technology(net)Primary place of % 100employees 25 millionin revenue97%OtherYes 5 years old27% 15%Revenue stageUSChina56% 5 years old(USD)63%24%Profitable71%1,100CanadaCompany age24%Pre-revenue12% 25 millionin revenueFoundergender32%At least onefemale founder68%Male-onlyfounder(s)44%NoCompanies with at leastone founder born outsidetheir primary country52%US53%UK52%Canada 2020 SVB Financial Group. All rights reserved. SVB, SVB FINANCIAL GROUP, SILICON VALLEY BANK, MAKE NEXT HAPPEN NOW and the chevron device are trademarks of SVB Financial Group, used under license. Silicon Valley Bank is a member of theFDIC and the Federal Reserve System. Silicon Valley Bank is the California bank subsidiary of SVB Financial Group (Nasdaq: SIVB). Silicon Valley Bank, an authorized bank branch under the Bank Act (Canada). This material, including without limitationto the statistical information herein, is provided for informational purposes only, and has been derived based upon the responses received from SVB’s Startup Outlook Survey. Nothing relating to the material should be construed as a solicitation, offer orrecommendation to acquire or dispose of any investment, or to engage in any other transaction.
About the Startup Outlook Survey Our annual survey offers insights into what is on the minds of technology and healthcare startup leaders. For the 2020 report, we conducted the survey in October and November 2019 and received responses from startup executives in innovation hubs primari
