2020 STARTUP OUTLOOK
STARTUPS SEE BRIGHT CONDITIONS IN 2020
For SVB’s 11th annual Startup Outlook Report, we asked founders and executives in the US, the UK, China and Canada to share their perspectives on the year ahead. Every industry today is touched by innovation in one way or another, creating job growth, new markets and long-term opportunity.
Startups are in a positive mood at the start of 2020. But the findings also underscore challenges around raising capital, finding talent and building
more-diverse leadership teams.
Read the full Startup Outlook Report below and follow the links to country-specific reports to learn if startups think that trade wars, Brexit and the return of IPOs may affect business. Download the report here.
2020 GLOBAL STARTUP OUTLOOK FINDINGS
Two-thirds of startups say 2020 will be better
The innovation economy continuously adapts to change, and entrepreneurs are optimistic by nature. Despite the dramatic political and economic transitions under way, startups consistently share a positive forecast for improving business conditions.
In addition, 79% of startups plan to hire in 2020, underscoring their critical role as job creators.
Capital abounds, but it is not easy to access
While there is no shortage of investors, they are increasingly selective about how and when to invest. Just 12% of startups say it’s getting easier to raise funding, while 41% say it is getting harder. Even so, for those startups that sought capital in 2019, all but 11% were successful, and 56% said they raised their most recent round in less than six months.
“As an early-stage, diverse (with women and minority co-founders) medtech company, access to pre–Series A and A financing is a monumental challenge.”
—Co-founder, US medical device company
Startup capital comes from many sources
With the rise of non-traditional sources of capital, startups report that they are tapping a variety of funders. Venture capital, however, was still the top source for those that recently raised capital.
Venture capital still dominates
Startups again expect venture capital to be their next source of funding. Interestingly,
12% of startups do not plan to raise money in the near future but to instead rely on organic growth.
Most startups expect to be acquired
While headlines both trumpet and criticize recent IPOs, the fact is most entrepreneurs never expect to reach a public market exit (except in China, where an IPO is typically the top goal). And in this environment, it’s sometimes hard to pinpoint a long-term goal.
Access to talent is top public policy issue
Finding skilled talent is a top concern in many innovation hubs.
“Talent ‘wars’ continue to drive up costs and make scaling more difficult.”
—VP of finance, US cybersecurity company
“Cybersecurity and data sovereignty need to be addressed systematically by Canada for us to just maintain our standing in the world.”
—Executive, Canadian tech company
Many startups say hiring is getting harder
Low unemployment rates, competition for top talent, stiffer immigration rules and the high cost of living in global tech hubs combine to make hiring talent difficult. Demand is highest for product development and R&D roles.
“Access to EU talent and being a welcoming place are key for the UK to remain a technology leader.”
—VP of finance, UK cybersecurity company
“We should be open to educating everyone, and talented people should be allowed to stay and work in the US.”
—Co-founder, US fintech company
Entrepreneurship knows no boundaries
Entrepreneurs hail from countries all over the world, bringing their ideas to innovation hubs in the US, the UK and Canada. Half of startups in those three countries have at least one foreign-born founder.
“Bring back US entrepreneur visas for founders.”
—CEO, US AI company
Are women making it into startup leadership?
Industry leaders and individual companies are increasing awareness and efforts to improve female representation in tech leadership, but the gap to reach gender parity remains wide.
SVB will publish an in-depth report on Women in US Technology Leadership in H1 2020.
How are ethnic and racial minorities represented in startup leadership?
For the first time, we asked startups in the US, the UK and Canada about ethnic and racial minorities* in leadership positions.
What are startups doing to encourage a diverse workforce?
We asked startups in the US, the UK and Canada what kinds of programs they have to increase diversity. While 43% say they have companywide promotion and hiring goals, fewer than one in five has these goals specifically for C-level positions. About one-third have board member diversity goals.
"Make it easier for injustices to be corrected and penalize VCs and boards for poor diversity.”
—CEO, US consumer internet company