67% of entrepreneurs expect business conditions to be better than 2019
SANTA CLARA, Calif., February 11, 2020 - Silicon Valley Bank (SVB), the bank of the world's most innovative companies and their investors, today released the 11th edition of its Startup Outlook Report. Kicking off the new decade, the report found that most startups are optimistic about global business conditions amidst economic and political uncertainty, with 67% of entrepreneurs expecting that conditions will improve this year compared to 2019. However, the report finds that despite this optimism, startups are concerned about raising capital and hiring talent. Amid calls for greater diversity in the startup community, the report underscores the large gap that must be closed before reaching gender, ethnic and racial parity in tech leadership roles. The report is based on a survey of 1,100 startup founders and executives in the US, the UK, China and Canada.
“The 2020 results underscore a few key themes: There’s rarely been a better time to be an entrepreneur. Two-thirds of the startups we surveyed are optimistic about improving business conditions, almost all are planning to hire, and most of those who are attempting to raise capital report they are successful,” said Greg Becker, CEO of Silicon Valley Bank. “We know economic and political events are hard to predict, especially how they may affect access to capital and the skilled talent needed to fuel growth. Still, startup founders and innovators are resilient. Survey results of the last three years generally describe a steady level of confidence, even in the face of continuous market shifts.”
Following are the key findings from the global survey, which was conducted between October and November 2019. Most Startup Outlook 2020 respondents are founders or executives of companies with fewer than 25 employees and less than $25 million in annual revenue. The full report is available at https://www.svb.com/startup-outlook-report-2020.
Business Conditions and Hiring
- 67% of entrepreneurs expect business conditions in 2020 to be better than 2019; 24% expect business conditions to be the same as 2019.
- 79% of startups plan to hire in 2020, underscoring their growth plans and roles as job creators, but 45% of startups say it is getting harder to hire.
- Most startups in the US, UK and Canada say their long-term goal is be acquired as opposed to completing an IPO.
- Despite an influx of capital, nearly half (41%) of startups say it is getting harder to raise funding; just 12% say it’s getting easier.
- Of those who successfully raised capital in 2019 (89%), 56% said they raised their most recent round in less than six months. Venture capital was the primary source of funding, followed by friends and family.
- 36% of startups expect venture capital to be the source of their next funding.
- 12% of startups do not plan to raise money in the near future, but instead rely on organic growth.
Diversity in Leadership
- Half of startups in the US, UK and Canada have at least one foreign-born founder, highlighting the fact that entrepreneurship knows no boundaries.
- 43% of startups have at least one female C-suite executive, and 42% have at least one female board member.
- 42% of startups have at least one C-suite executive who is ethnically or racially diverse and 44% have at least one board member who is ethnically or racially diverse. Please see the report for how ethnic and racial diversity is defined.
- 26% of startups have programs in place to increase diverse representation in leadership.
- When asked about the types of programs, 43% of startups said they have company-wide promotion and hiring goals, but fewer than one in five has these goals specifically for C-level positions. Another one-third has diversity goals for board members.
- The most common programs in-place include flexible work environments, recruiting outreach/interview techniques, leadership development and training and supporting diversity-focused organizations.
- Access to talent is the top public policy issue impacting half of startups around the world.
- Secondary concerns include cybersecurity and consumer privacy (both at 29%), and corporate taxes and international trade (both at 26%).
For additional survey results, please visit: https://www.svb.com/startup-outlook-report-2020. SVB will publish an in-depth report on Women in US Technology Leadership in Q1 2020.
About Silicon Valley Bank
For more than 35 years, Silicon Valley Bank (SVB) has helped innovative companies and their investors move bold ideas forward, fast. SVB provides targeted financial services and expertise through its offices in innovation centers around the world. With commercial, international and private banking services, SVB helps address the unique needs of innovators. Learn more at svb.com.