US STARTUP OUTLOOK 2020

US startups are bullish on 2020 Innovation is flourishing, and despite some cautionary signs most US startups see business conditions improving in 2020. A large majority of startups tell us that they plan to hire, and by a wide margin they expect to be their next source of funding.

US startups see better times ahead Accessing startup capital Startups still rely on is no easy task venture capital US startups Describe your outlook for business conditions for your company are optimistic in the coming year. Even as non-traditional funding sources grow, and resilient: There may be record amounts of capital in venture capital remains startups’ top choice by In recent years, the innovation ecosystem, but it’s not easy a wide margin. In the short term, 12% of startups they have shown 2020 62% 28% 10% to access, according to startups. About equal say they have no plans to raise money; instead, essentially percentages say it is getting harder or there is no change. Investors are looking for startups with they are counting on organic growth. the same level 2019 60% 31% 9% of confidence experienced founders, a compelling product, a that business strong growth plan and a path to profitability. conditions will 2018 61% 34% What do you expect your next source of funding to be? improve in the 5% year ahead. What is your view of the current fundraising Venture capital 40% Will be better Will be the same Will be worse environment for companies like yours? Organic growth — 12% no need for funds 8% 45% 42% Corporate venture 7% Startup hiring spree continues in 2020 Getting No change investor harder Friends and family 6% of startups say How would you describe the hiring Angel group 5% they plan to add environment compared with a year ago? 83% employees in 2020 Seed venture firm 5% Getting No change Family office With very low unemployment rates and 47% 13% easier 4% new immigrant visa restrictions, about half Bank debt 4% of startups say hiring is getting harder. Harder 44% of startups raising private Other* 9% Easier 57% capital secured their most 9% recent round in less than six months * Other includes accelerator/incubator, crowdfunding, merger and IPO.

See the 2020 Global Startup Outlook Report at www.svb.com/startup-outlook-report-2020. US STARTUP OUTLOOK 2020

Acquisition is the top Are women making it into Finding talent is top public long-term goal startup leadership roles? policy issue

For US startups, acquisition is typically the realistic long- Despite growing awareness and efforts to increase the number of While it’s no surprise that access to talent tops the list term exit strategy. That preference is increasing compared women in tech leadership, US startups still have a long way to go of public policy issues, cybersecurity and consumer with 2019. to achieve gender parity. privacy are now as big a concern for US startups as employee healthcare costs.

What is the realistic long-term goal for your company? What are the three most important public policy 2020 58% 17% 14% 11% 42% 40% issues affecting companies like yours? 2019 50% 18% 17% 15% have at least one female have at least one Access to talent C-suite executive female board member (immigration and 55% Be acquired Go public via an IPO education) Remain private Don’t know/prefer not to say Cybersecurity 35%

US, startups weigh in on Consumer privacy 34%

trade tensions Healthcare costs How are ethnic and racial 34% for employees minorities represented in US Similar to a year ago, 50% of US startups have at least some concern about trade tensions. Among Chinese startups, a larger percentage International trade 26% startup leadership? now say they are not concerned compared with 2019 — a sign that they are coping with the trade environment. Employees vs. For the first time, we asked startups in the US about independent 19% ethnic and racial minorities* in leadership positions. contractors How concerned are you that trade policy between the US and China Patent litigation 19% will negatively impact your business in 2020?

Corporate taxes 18% US 50% 34% 16% Banking/payment 16% 43% 40% regulation China 42% 44% 14% have at least one C-suite have at least one board Monetary policy executive who is ethnically member who is ethnically 13% Not concerned Somewhat concerned Very concerned (e.g., interest rates) or racially diverse or racially diverse

*Ethnic and racial minorities are defined as Black/African American, Hispanic, Asian/Pacific Islander, American Indian and Alaskan Native. STARTUP OUTLOOK 2020

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 primarily in the US, the UK, Canada and China.

Total Industry sector Size Company age Profitable respondents 56% 71% Yes < 5 years old 58% 27% 15% 69% 17% 14% 0–25 26–100 > 100 44% 1,100 Technology Healthcare Other employees employees employees 29% No (net) (net) > 5 years old

Primary place of business Ownership Revenue stage Founder Companies with at least (USD) gender one founder born outside 63% 64% their primary country US < $25 million in revenue 32% At least one female founder 52% 1% US Other 97% 5% Private 53% 68% UK Canada Male-only 24% 12% founder(s) 24% 7% 3% Pre-revenue ≥ $25 million 52% China UK Public in revenue Canada

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