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Chinese Startup Executives Seek Venture Capital, Plan for IPOs

Chinese innovators are seeking venture capital to prime growth and say their long-term goal is to go public. They are also navigating challenges similar to those of other startups around the world. Entrepreneurs expect continued difficulty raising funds and finding the talent they need to move their businesses forward. Read Letter from SVB’s CEO


FUNDING

Venture capital is the top funding source for Chinese startups

As the Chinese government takes steps to move from an industrial economy to an innovation economy, startups plan to tap venture capital as their top funding source. Thirty-eight percent of Chinese startups expect their next source of funding to come from venture capital. Numbers are similarly high in other parts of the world: 42 percent of U.S. startups and 40 percent of U.K. startups expect to use venture capital.

What do you expect your company’s next source of funding will be? Innovation Economy Outlook 2016

Fundraising is difficult regardless of geography

Fundraising is hard worldwide. Among the Chinese startups surveyed, 81 percent said the fundraising environment is extremely or somewhat challenging, compared with 82 percent in the U.S. and 80 percent in the U.K.

What is your view of the current fundraising environment? Innovation Economy Outlook 2016

Chinese startups are aiming for IPOs

Of the Chinese startups surveyed, 62 percent said their long-term exit strategy is an IPO, while 5 percent planned to be acquired. Startups in the U.S. and U.K. have a different end goal. Some 56 percent of U.S. startups and 59 percent of U.K. startups said they are setting a course toward acquisition.

What is the realistic long-term goal for your company? Innovation Economy Outlook 2016

China expects the strong M&A market to continue

While an IPO may be their long-term goal, Chinese startups are looking for M&A opportunities inside and outside the country as a way to access technology know-how and new markets. Among the Chinese startups surveyed, 90 percent believed there will be as many or more acquisitions than there were last year.

How do you think the M&A market will change over the next 12 months? Innovation Economy Outlook 2016

Recruiting and access to financing challenge startups around the world

Similar to startups in the U.S. and the U.K., 20 percent of Chinese startups said recruiting is their biggest challenge, and 16 percent said it’s access to financing.

What is the biggest challenge your company faces? Innovation Economy Outlook 2016

HIRING & TALENT

Startups struggle to fill jobs with the right talent

Finding the right talent is difficult no matter where entrepreneurs live. Among the Chinese executives surveyed, 98 percent said it is challenging to hire. In the U.S. and U.K., 95 percent of entrepreneurs said it’s challenging to find workers with the necessary skills.

How challenging is it to find workers with the skills necessary to grow your business? Innovation Economy Outlook 2016

WOMEN IN TECH

Chinese startups have more women in leadership

Chinese startups outpace their U.S. and U.K. counterparts when it comes to the number of women in leadership positions. Among the startups surveyed, 79 percent have women in C-level roles, compared with 54 percent of U.S. startups and 53 percent of U.K. startups.

How many women are in leadership positions within your company? Innovation Economy Outlook 2016

PUBLIC POLICY

Cybersecurity is the No. 1 policy concern for Chinese startups

Among the Chinese startups surveyed, 47 percent said cybersecurity regulation is the policy issue with the most impact on companies like theirs. Corporate taxes, consumer privacy regulations and banking regulation are also key concerns.

What are the most important public policy issues affecting companies like yours? Innovation Economy Outlook 2016


A third-party firm, Peerless Insights Survey, conducted the Innovation Economy Outlook 2016 survey online on Silicon Valley Bank’s behalf from November 12, 2015, to January 6, 2016.

This material, including without limitation to the statistical information herein, is provided for informational purposes only and is compiled from the survey that we worked on with Peerless Insights, a third-party source. The information should not be viewed as tax, investment, legal or other advice nor is it to be relied on in making an investment or other decision. You should obtain relevant and specific professional advice before making any investment decision. Nothing relating to the material should be construed as a solicitation, offer or recommendation to acquire or dispose of any investment or to engage in any other transaction.

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SPD Silicon Valley Bank is a Sino-U.S. joint-venture bank of Silicon Valley Bank, the California bank subsidiary and commercial banking operation of SVB Financial Group, and Shanghai Pudong Development Bank.

©2016 SVB Financial Group. All rights reserved. Silicon Valley Bank is a member of the FDIC and the Federal Reserve System. Silicon Valley Bank is the California bank subsidiary of SVB Financial Group (Nasdaq: SIVB)

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