Southern California Startup Outlook 2017 · PDF fileSouthern California Startup Outlook 2017...
-
Upload
dinhnguyet -
Category
Documents
-
view
217 -
download
3
Transcript of Southern California Startup Outlook 2017 · PDF fileSouthern California Startup Outlook 2017...
Southern California Startup Outlook 2017 KEY INSIGHTS FROM SILICON VALLEY BANK’S STARTUP OUTLOOK SURVEY
@SVB_Financial #StartupOutlook
U.S. Startup Outlook 2017 - SoCal Report 2
Capitalizing on consumer, software, space and life science innovations, companies from all over Southern California are thriving. They are fueled by a flourishing ecosystem that includes a growing number of local equity capital sources from both venture capitalists and corporate investors. We expect 2017 will continue the string of great years, with several VCs closing large funds and multiple high-growth companies filing to go public.
In this second annual Southern California-focused report, you’ll learn how tech and healthcare executives from San Luis Obispo to San Diego view the opportunities and challenges in 2017. These findings come out of a larger annual SVB survey of nearly 950 entrepreneurs, primarily based in the U.S., U.K. and China.
Entrepreneurs all over tell us that they are experiencing a greater amount of uncertainly this year compared to last. Consequently, that uncertainty has led to a more cautious outlook. However, they’re still hiring, and they’re still optimistic.
While Southern California may be considered an “emerging” tech hotbed, the truth is that our region has birthed a tremendous amount of innovative companies that are now powering the digital age. Of these next-generation stars — Snap, Ring, ZipRecruiter, Dollar Shave Club, Blackline, Hulu and SpaceX — the youngest is six years old.
SVB continues to grow its footprint in Southern California. Last year, our Santa Monica office more than doubled market share of early-stage companies in Los Angeles. SVB’s Orange County and San Diego markets
also grew substantially. The survey shows some interesting differences between this dynamic Southern California ecosystem and the broader survey findings. Here are a few contrasts:
• Southern California startups were more likely to be in the consumer internet/digital media and healthcare sectors.
• These respondents also tended to have less revenue than the average U.S. startup, but a higher percentage reported they planned to turn a profit.
• Around fundraising, Southern California startups said they planned to rely more on corporate venture compared with the U.S. overall.
We will use these findings in two ways: To help inform policymakers about how to support companies across our region and help startups execute on new strategies for success. Please view all of the Startup Outlook 2017 reports. We hope these findings from Southern California, the U.S., U.K. and China offer you insights and benchmarks as you chart your business’ course in 2017.
Rob Freelen Managing Director Market Manager, Los Angeles Silicon Valley Bank
Strength in the SoCal Innovation Sector
LETTER FROM
M
ARKET MAN
AGER
U.S. Startup Outlook 2017 - SoCal Report 3
SoCal startups are cautiously optimistic More than half of SoCal startups say they expect business conditions to improve in 2017, and only 6% think conditions will worsen.
Describe your outlook on business conditions for your company this year compared to last:
BUSIN
ESS CON
DITION
S
40% Will stay the same
6% Will be worse
54% Will be better
U.S. Startup Outlook 2017 - SoCal Report 4
Extremely challenging
37%
23%
FUN
DING
More SoCal startups find fundraising “extremely challenging” Fundraising is difficult for all startups, but nearly 37% of SoCal startups say it is “extremely challenging,” compared to 23% for the U.S. overall. SoCal has far fewer resident VCs than Silicon Valley, which often requires startups to bootstrap longer.
What is your view of the current fundraising environment?
SoCal U.S.
U.S. Startup Outlook 2017 - SoCal Report 5
Venture capital
Corporate Private equity
Angel/Micro VC
Individual Other
39%
10%
51%
16%
FUN
DING
After VC, SoCal startups depend on corporate venture Overwhelmingly, startups expect their next round of financing to come from VCs. In SoCal, corporate investors also play a meaningful role: 19% of SoCal startups say corporate investors are their second most likely source of capital compared to just 11% for U.S. startups overall. The region’s concentration of digital media startups attracts more corporate investment, particularly in AR and VR companies.
Other includes: organic, growth, bank debt, IPO, grant, crowdfunding, merger.
6% 13%
7% 6% 8% 13% 11%
19%
What do you expect to be your company’s next source of funding?
SoCal U.S.
U.S. Startup Outlook 2017 - SoCal Report 6
Majority of SoCal startups expect to be acquired Acquisition is the dominant realistic, long-term exit strategy of all startups. Despite excitement around IPOs, few startups expect to go public. That is even truer in SoCal, where just 4% expect to have an IPO, compared to 16% nationally.
More SoCal startups are focused on consumers rather than enterprises, which typically leads to faster profitability. With profitability, companies can choose to stay private longer.
What is the realistic long-term goal for your company?
53%
Acquisition
U.S.18% Stay private
16% IPO
13% Don’t know
58%
Acquisition
4%
IPO
25% Stay private
SoCal
13% Don’t know
FUN
DING
U.S. Startup Outlook 2017 - SoCal Report 7
SoCal startups expect M&A to be even stronger in 2017 Nine of 10 SoCal startups predict as many or more mergers and acquisitions in 2017. One of the more interesting M&A trends is the increased appetite of acquirers outside the technology sector, creating additional opportunities for startups.
How do you think the M&A market will change in 2017?
43% No change
9% Fewer acquisitions
48% Expect more acquisitions
FUN
DING
U.S. Startup Outlook 2017 - SoCal Report 8
SoCal startups continue to hire A large majority of SoCal startups plan to expand their teams in 2017. For 86% of these startups, finding the right talent is challenging.
What are your projections for hiring new employees this year?
26% Keep at current level
1% Reduce workforce
73% Increase workforce
HIRIN
G &
TALENT
U.S. Startup Outlook 2017 - SoCal Report 9
PUBLIC PO
LICY
What are the most important public policy issues affecting companies like yours?
Access to talent is top policy concern of SoCal startups With finding skilled workers so difficult, SoCal startups named access to talent as the top public policy issue affecting companies like theirs. Healthcare costs are a close second. For more perspective on these issues, and to learn U.S. entrepreneurs’ ideas for the new administration, see Startups to President Trump: Ideas to Grow the U.S. Innovation Economy.
Note: Respondents were given the opportunity to select multiple responses.
30%
46%48%
30% 29%
Access to talent
Healthcare costs
Corporate taxes
Patent litigation
Cyber-security
U.S. Startup Outlook 2017 - SoCal Report 10
HIRIN
G &
TALENT
More than half of SoCal startups have no women in executive positions Women in tech leadership has been a topic of conversation in the U.S. tech community and globally for several years. It is well known that women are underrepresented on startup boards and in the executive suite. While 55% of SoCal startups have no women in a C-level role, just 16% say they have programs in place to increase the number of women in leadership roles.
Percentage of SoCal startups with no women in leadership positions:
No women in executive
positions
63%
No women on board of
directors
55%
U.S. Startup Outlook 2017 - SoCal Report 11
Policy is driving some SoCal startup operations offshore One in four respondents say that regulations prompted them to locate facilities or move non-sales operations outside the U.S., in line with national findings.
PUBLIC PO
LICY
34% Tax policy
31% Regulatory environment
34% Immigration policy27%
Here’s why
Have U.S. laws and regulations materially affected your company’s decision to locate facilities or hire employees for operational non-sales activities outside the U.S.?
Hired or moved operations
offshore
Yes
U.S. Startup Outlook 2017 - SoCal Report 12
ABOU
T THE SU
RVEY
Industry sectorProfitable
56% Yes
Ownership
69%Technology (net)
15%Healthcare (net)
16%Other
Revenue stage
Total respondents
941Primary place of business
62% U.S.
14% U.K.
16%China
8%Other 17%
Pre-revenue
65% Up to $25 million in revenue
18% More than $25 million in revenue
95% Private
5% Public
Our eighth annual survey of technology and healthcare executives offers insight into what’s on the minds of innovation leaders today. For this year’s survey, we received 941 responses covering such topics as how innovation companies are faring, hiring projections and how government policies are affecting business growth. About 10% of the total respondents were located in Southern California.
About the Startup Outlook 2017 survey
Peerless Insights Survey, a third-party firm, conducted the Startup Outlook 2017 survey online on Silicon Valley Bank’s behalf from November 14, 2016, to January 3, 2017.
44% No
03
0402
01
SVB Southern California O�ces
Santa Monica o�ce 1901 Main StreetSanta Monica, CA 90405
Los Angeles o�ce 15260 Ventura BoulevardSherman Oaks, CA 91403
San Diego o�ce 4370 La Jolla Village DriveSan Diego, CA 92122
Orange County o�ce 200 Spectrum Center DriveIrvine, CA 92618
Peerless Insights Survey, a third-party firm, conducted the Startup Outlook 2017 survey online on Silicon Valley Bank’s behalf from November 14, 2016 to January 3, 2017.
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.
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).
©2017 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. CompID—274
About Silicon Valley BankFor more than 30 years, Silicon Valley Bank has helped innovative companies and their investors to be successful, providing targeted financial services and expertise. Offering commercial, international and private banking services in innovation centers around the world — including Southern California offices in Santa Monica, Los Angeles, Irvine and San Diego — SVB helps address the unique needs of innovators. Visit svb.com.
Learn more at svb.com/startup-outlook-report.
Southern California Offices
01
02
03
04