Innovation Economy
Outlook UK
2014 Report
ENTER
Welcome to Innovation Economy Outlook 2014, Silicon
Valley Bank’s annual study of executives’ perceptions
in the innovatio...
3 Executive summary
4 Report at a glance
3
Introduction
6 The UK innovation
economy hits its stride
9 	 2013 in review
11 ...
If the UK can meet the needs of rapidly growing
innovation economy businesses at home and help
them tap into global market...
Executive summary
Heading into 2014, the UK innovation ecosystem,
though young, is vigorous and filled with promise.
Three...
HIGHLIGHTS
Optimismfollowsstrong2013.
Three-quarters of surveyed UK executives say
their business met or beat 2013 revenue...
Overall, UK innovation
economy businesses are more
internationally focused than
their US peers.
INNOVATION ECONOMY OUTLOOK...
A vibrant innovation economy starts with entrepreneurs – people with ideas and the
passion to turn those ideas into breako...
In the following report, we explore the views of
respondents to our annual Innovation Economy Outlook
survey: executives f...
The UK innovation economy hits its stride
CHAPTER 1
AMOUNT
INVESTED
MILLIONS OF
POUNDS
2007 2008 2009 2010 2011 2012 2013
...
The innovation economy businesses in
this year’s survey performed well in 2013.
Seventy-seven percent of executives say
th...
Conservatism appears to be a healthy strategy. UK
executives and investors understand the need to manage
growth with limit...
UK executives are uniformly upbeat. The
vast majority say business conditions in
2014 will be even better than in 2013.
Al...
Executives at young
software businesses
(those with less than
$25 million USD in
revenue) are even more
optimistic, with 8...
Across the board, executives are looking
within for growth in the coming year
by selling new products, entering new
market...
UK executives
are uniformly upbeat.
The vast majority say
business conditions
in 2014 will be
even better
than in 2013.
IN...
Although UK venture investing has
rebounded to the levels we saw
before the financial downturn, global
venture capital wil...
Next source of capital
Looking forward, entrepreneurs plan to reduce reliance
on angel funding and government grants while...
While 15 percent of UK executives say access to equity is
their top challenge, this is less than in the United States,
whe...
In fact, UK executives who successfully raised capital in
2013 are less likely than those in the United States to say
the ...
Managing capital with realistic expectations
CHAPTER 1
Looking forward, 15 percent of UK
executives say access to equity i...
The innovation economy continues
as a powerful job creator. Eighty-four
percent of UK executives say their
business plans ...
In fact, most UK executives expect significant growth.
Two-thirds of the respondents who anticipate growing
in 2014 predic...
Clearly, the foundation for a vibrant UK innovation economy is solid. The UK has a
critical mass of well-performing busine...
The challenge: Scaling up
CHAPTER 2
Greatest challenges in 2014: UK vs. US
UK innovation economy executives say their two ...
The challenge: Scaling up
CHAPTER 2
CONTINUED FROM 22
When it comes to top challenges in hiring — skills,
education and ex...
The challenge: Scaling up
CHAPTER 2
UK REVENUE-GENERATING
41%Experienced STEM
15%
Entry-level STEM
36%
Experienced non-STE...
Because scaling operations
involves people, the core
challenge is very much a matter
of finding and retaining talent.
INNO...
UK innovation economy businesses want to make their mark at home. At the same
time, they see the benefits of extending the...
Many UK executives also are considering service centres
in the United States to support their sales.
For production, Europ...
Connecting to the global innovation economy
CHAPTER 3
International footprint by activity
UK
◻ Currently
◻ Next 12 months
...
To envision the shape of the
UK innovation economy,
consider the words of
Thomas Friedman:
“The world is flat.”
INNOVATION...
Connecting to the global innovation economy
CHAPTER 3
Most appealing international locations by activity
◻ US
◻ Europe
◻ A...
The UK at last has the makings of a vibrant
innovation economy. Entrepreneurs are
turning their passion and ingenuity into...
Entrepreneurs are
turning their passion
and ingenuity into
breakout businesses.
INNOVATION ECONOMY OUTLOOK UK REPORT 2014 ...
The Innovation Economy Outlook 2014 is Silicon Valley Bank’s fifth annual
report based on its survey of executives in the ...
“2014 is the year my company will
develop a working prototype. There
is immense interest in the company
from established p...
SNAPSHOT UK survey respondents
The 2014 survey reflects the views of 100 executives with
UK-based high-growth technology a...
A snapshot of UK survey respondents
SNAPSHOT
Publicly traded vs. privately held
100%
$1.9M
$7.0M
US
◻ Profitable
◻ Not yet...
Special thanks to dcIQ for your collaboration on this study. Thank you for your support:
Entrepreneur First
Level 39
Techh...
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Innovation Economy Outlook 2014 - UK Report

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High-growth innovation companies in the UK anticipate impressive job growth in 2014 as they take a global approach to business expansion, according to Silicon Valley Bank's 2014 Innovation Economy Outlook study. These findings are based on Silicon Valley Bank's annual survey of more than 1,200 executives from software, hardware, cleantech and healthcare companiesin startup and growth stages of business in the US, UK and other global innovation hubs. In addition to the high rate of anticipated job creation, the study also reveals pervasive optimism, intent to access international markets for sales, and the ever-present challenge to obtain equity capital by some of the most innovative, high-growth companies in the world.

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Innovation Economy Outlook 2014 - UK Report

  1. 1. Innovation Economy Outlook UK 2014 Report ENTER
  2. 2. Welcome to Innovation Economy Outlook 2014, Silicon Valley Bank’s annual study of executives’ perceptions in the innovation sector. Each year, we take the pulse of these businesses to find out how they’re doing, from past performance to future prospects, and the challenges and opportunities they foresee. This year we expanded our survey to include businesses in innovation centres around the world and, in addition to start- ups, larger businesses with revenues upward of $1 billion USD. I’m pleased to offer the most comprehensive look yet at the state of the global innovation economy, with insights reflecting the more than 1,200 survey responses. Our prognosis is, in a word, momentum. We see abundant potential in the pace of new business formation, global expansion and availability of capital, and the emergence of new products and solutions that will change the world. Many of the executives surveyed are SVB clients, which should come as no surprise to those of you who know us. SVB is the bank for half of all venture capital-backed technology and life science businesses in the United States, two-thirds of those businesses that went public in 2013 and a majority of the investors who fund them. The make-up of our client base is growing increasingly global and has expanded over the years to serve businesses of all sizes. As the bank of the global innovation economy, we are committed to bringing clients the connections and tailored financial solutions they need to succeed. We also consider ourselves champions for innovation. With studies like this one, we can build a better understanding of what it takes to disrupt an industry or launch a high-growth business. And with that knowledge, we can help create a better environment in which all innovators can thrive. Thanks for taking a look at this year’s report. Reading between the statistics, insights and observations, you’ll find stories of the phenomenal intelligence, courage and determination it takes to build a successful business. Greg Becker President and Chief Executive Officer Silicon Valley Bank and SVB Financial Group Letter from the CEO INNOVATION ECONOMY OUTLOOK UK REPORT 2014INNOVATION ECONOMY OUTLOOK UK REPORT 2014 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  3. 3. 3 Executive summary 4 Report at a glance 3 Introduction 6 The UK innovation economy hits its stride 9 2013 in review 11 2014: A look ahead 13 Building from the core 15 Managing capital with realistic expectations 20 Growth means jobs 6 Hitting its stride 22 The challenge: Scaling up 27 Connecting to the global innovation economy 32 Seizing the opportunity at hand 22 Scaling up 27 Connecting 34 About Silicon Valley Bank’s Innovation Economy Outlook 2014 36 A snapshot of survey respondents 34 About this report CONTENTS INNOVATION ECONOMY OUTLOOK UK REPORT 2014INNOVATION ECONOMY OUTLOOK UK REPORT 2014 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  4. 4. If the UK can meet the needs of rapidly growing innovation economy businesses at home and help them tap into global markets, it will reap the benefits of jobs and economic growth. INNOVATION ECONOMY OUTLOOK UK REPORT 2014INNOVATION ECONOMY OUTLOOK UK REPORT 2014 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  5. 5. Executive summary Heading into 2014, the UK innovation ecosystem, though young, is vigorous and filled with promise. Three-quarters of the executives surveyed say their business met or beat their 2013 revenue targets. Eight in 10 think business conditions will continue to improve in 2014. In 2014, UK executives see opportunities in offering new products, entering new markets and increasing their size and scale. This momentum translates into jobs. Eighty-four percent of this year’s respondents plan to grow their workforce in the coming year, outpacing even their peers in the United States. On a variety of fronts – 2013 performance, 2014 outlook and 2014 views on the fundraising situation – UK executives show they have learnt to manage their businesses and their expectations to reflect the capital available in the UK market. The foundation has been laid for a vibrant UK innovation economy. What then does the future hold? In the following pages, we explore the views of respondents to our annual Innovation Economy Outlook survey, including executives from rapidly growing businesses in the software, hardware, healthcare and cleantech sectors. We also examine the opportunities and obstacles facing businesses in the UK, and compare them to what US businesses are seeing. UK innovation economy executives say their two biggest challenges in 2014 are scaling their operations and recruiting and managing talent. While the vast majority of businesses want to hire, virtually all executives have a difficult time finding people with the skills and experience they need. For the UK economy, the opportunity is clear. If the UK can meet the needs of rapidly growing innovation economy businesses at home and help them tap into global markets, it will reap the benefits of jobs and economic growth. INNOVATION ECONOMY OUTLOOK UK REPORT 2014 3INNOVATION ECONOMY OUTLOOK UK REPORT 2014 3 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  6. 6. HIGHLIGHTS Optimismfollowsstrong2013. Three-quarters of surveyed UK executives say their business met or beat 2013 revenue targets, and 8 in 10 think business conditions will be even better in 2014. Growthwillcomefromthecore. Growth is expected to stem from new products, new markets and scaling operations. CapitalandtalentareessentialtotaketheUKinnovationeconomy tothenextlevel. UK businesses must find the capital and the means to meet their top challenges – scaling operations and recruiting and managing talent – if the innovation economy is to reach its full potential. The UK innovation economy hits its stride The challenge: Scaling up Connecting to the global innovation economy UKbusinesseshaveaglobalperspectiveongrowth. Although UK businesses look first to the UK for 2014 growth, the United States is not far behind. Hiring patterns track these growth aspirations. Overall, UK businesses are more internationally focused than their US peers. Report at a glance HIGHLIGHTS 1 2 3 Growthmeansjobs. More than 8 in 10 surveyed UK executives – even more than in the United States – expect their business will grow in 2014. Young businesses are growing the fastest. At the median, young businesses expect to double in size. Business conditions outlook 40% 39% 19% 2% Business conditions outlook 2014 VS. 2013 (UK) Much better Somewhat better About the same Somewhat worse Greatest opportunities in 2014 New products or markets Scaling operations Business conditions in existing markets Access to equity MA 35% 30% 25% 20% 15% 10% 5% 0% 37% Top hiring locations ◻ UK ◻ US ◻ Western Europe ◻ Eastern Europe 1% 9% 1% 89% 36% UK US INNOVATION ECONOMY OUTLOOK UK REPORT 2014 4INNOVATION ECONOMY OUTLOOK UK REPORT 2014 4 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  7. 7. Overall, UK innovation economy businesses are more internationally focused than their US peers. INNOVATION ECONOMY OUTLOOK UK REPORT 2014 5INNOVATION ECONOMY OUTLOOK UK REPORT 2014 5 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  8. 8. A vibrant innovation economy starts with entrepreneurs – people with ideas and the passion to turn those ideas into breakout businesses. In turn, those entrepreneurs benefit from the resources available in a vibrant innovation economy – talent, capital and a supportive business environment. This ecosystem provides what entrepreneurs need for success. Five years ago, in the midst of a financial downturn, the outlook for the UK innovation economy was uncertain. A January 2009 survey of 80 UK-based venture capitalists found two-thirds believed the fundraising environment was more difficult than it had been for a decade or longer. Three-quarters of respondents thought venture investments would decrease, and half thought the drop would be significant. Eighty-eight percent said it was difficult or impossible to raise B and C rounds for their businesses – a particularly dire view, since they also believed that over half of their portfolio businesses could not survive the coming year without raising new equity capital.1 In the words of Jeremy Hand, chairman of the British Private Equity Venture Capital Association, “Survival prospects for many early-stage businesses and investments [were] extremely uncertain,” as “the venture capital market in the UK, in contrast to the US, [had] not achieved the critical mass necessary to fund an appropriate proportion of the most promising and innovative businesses through all stages of their development.”2 Today, the picture is remarkably different. During 2013, the UK reaffirmed its standing as the European destination of choice in the global market for venture capital, with £1.2 billion flowing into UK businesses, up 13 percent from 2012. More important is that the overall ecosystem has moved from fragile to firm. 9 2 0 1 3 I N R E V I E W 1 1 2 0 1 4 : A L O O K A H E A D 1 3 B U I L D I N G F R O M T H E C O R E 1 5 M A N A G I N G C A P I T A L W I T H R E A L I S T I C E X P E C T A T I O N S 2 0 G R O W T H M E A N S J O B S The UK innovation economy hits its stride CHAPTER1 Silicon Valley Bank’s Innovation Economy Outlook 2014 UK Report 1 British Private Equity Venture Capital Association, “BVCA/Populus: Venture Capital Outlook Survey 2009,” www.bvca.co.uk/ResearchPublications/ResearchReports/BVCAPopulusVentureCapitalOutlookSurvey.aspx. 2 British Private Equity Venture Capital Association, “Benchmarking UK Venture Capital to the US and Israel: What lessons can be learned?” www.bvca.co.uk/Portals/0/library/Files/News/2008/2008_0008_benchmarking_uk_vc_to_israel_and_us.pdf. INNOVATION ECONOMY OUTLOOK UK REPORT 2014 6 CONTINUED ON 7 INNOVATION ECONOMY OUTLOOK UK REPORT 2014 6 CONTINUED ON 7 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  9. 9. In the following report, we explore the views of respondents to our annual Innovation Economy Outlook survey: executives from rapidly growing businesses in the software, hardware, healthcare and cleantech sectors. We compare the opportunities and obstacles facing businesses in the UK, and look at how those compare with the United States. In 2014, UK executives see opportunities in offering new products, entering new markets and increasing their size and scale. This momentum translates into jobs. Eighty- four percent of this year’s survey respondents plan to grow their workforce in the coming year, outpacing even their peers in the United States. On a variety of fronts – 2013 performance, 2014 outlook and 2014 views on the fundraising situation – UK executives show they have learnt to manage their businesses and their expectations to reflect the capital available in the UK market. From the start-up phase, UK executives focus relentlessly on the bottom line and use the resources available to them, for as long as possible. This helps them manage their need for external capital and helps reduce their vulnerability to external shocks. In addition, it lets them increase the probability that they will be able to raise capital when they need to by creating traction in the form of clients and/or revenue. The crucial issue in 2014 and beyond is growth. While there are plenty of younger businesses at the front end of the innovation pipeline, start-ups are finding it difficult to move through it and achieve scale. The UK innovation economy hits its stride CHAPTER 1 INNOVATION ECONOMY OUTLOOK UK REPORT 2014 7 CONTINUED FROM 6 INNOVATION ECONOMY OUTLOOK UK REPORT 2014 7 CONTINUED FROM 6 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  10. 10. The UK innovation economy hits its stride CHAPTER 1 AMOUNT INVESTED MILLIONS OF POUNDS 2007 2008 2009 2010 2011 2012 2013 £2,000 £1,500 £1,000 £500 £0 600 500 400 300 200 100 0 Source: British Private Equity Venture Capital Association NUMBER OF DEALS UK venture capital investments: 2007-2013 532 414 350 375 367 367 347 £1,347 £1,152 £900 £1,604 £1,328 £1,222 £1,377 INNOVATION ECONOMY OUTLOOK UK REPORT 2014 8INNOVATION ECONOMY OUTLOOK UK REPORT 2014 8 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  11. 11. The innovation economy businesses in this year’s survey performed well in 2013. Seventy-seven percent of executives say they met or beat their revenue targets. This is an even stronger showing than in the US survey, where 65 percent report meeting or exceeding targets. Most of the businesses that beat targets did so by between 1 and 20 percent, with 40 percent of businesses even exceeding that performance. That compares with 33 percent of US executives who beat targets by more than 20 percent. At the median, UK executives beat targets by 20 percent, compared with 15 percent among US executives. Strong performance by UK innovation economy businesses in 2013 partly reflects the fact that UK businesses generally had a good year. We also think it reflects the fact that UK entrepreneurs are realistic or even conservative in forecasting future performance. In fact, we think that the common UK executive approach to goal setting may account for the differences between the UK and US results. 2013 in review Meeting and beating revenue targets 2013 UK US 0 % 10 % 20 % 30 % 40 % 50 % 60 % Revenues were above target Revenues were roughly on target Revenues were below target 60% 50% 40% 30% 20% 10% 0% 54% 44% 23% 21% 23% 35% INNOVATION ECONOMY OUTLOOK UK REPORT 2014 9 CONTINUED ON 10 INNOVATION ECONOMY OUTLOOK UK REPORT 2014 9 CONTINUED ON 10 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  12. 12. Conservatism appears to be a healthy strategy. UK executives and investors understand the need to manage growth with limited private capital. They also remember the sobering lessons of the 2009 financial downturn. As a result, they tend to raise seed capital and then focus on generating revenue and reaching profitability. This approach may also have a cultural component. The UK ecosystem tends to echo the swings in the US innovation economy. Optimism (and, when it comes, pessimism) tends to take hold first in the United States and then radiate outward, with the highs in the UK never quite as high and the lows never quite as low as those in the United States. 2013 in review CHAPTER 1 Annual venture capital investment by geographic focus 2007 2008 2009 2010 2011 2012 2013 2007-2013 (ALL SECTORS) ◻ US ◻ Europe ◻ Asia ◻ Others $60 $50 $40 $30 $20 $10 $0 Source: Dow Jones VentureSource AMOUNT INVESTED (BILLIONS OF DOLLARS) INNOVATION ECONOMY OUTLOOK UK REPORT 2014 10 CONTINUED FROM 9 INNOVATION ECONOMY OUTLOOK UK REPORT 2014 10 CONTINUED FROM 9 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  13. 13. UK executives are uniformly upbeat. The vast majority say business conditions in 2014 will be even better than in 2013. Although that expectation is down slightly from a year ago, fewer UK executives express outright pessimism than a year ago. Rather, they expect the coming year to be about the same. Considering other survey results, these expectations may simply reflect the strength of the overall economic situation in 2013. Executives in the UK share an upbeat mood with their counterparts in the United States where 82 percent of respondents expect business conditions to improve in 2014. And in both places, executives at young software businesses (those with less than $25 million USD in revenue) are even more optimistic, with 85 percent projecting improvement. 2014: A look ahead 40% 2% 19% 39% 43% 2% 4% 40% 11% 2012 VS. 2013 2013 VS. 2014 UK business conditions outlook ◻ Much better ◻ Somewhat better ◻ About the same ◻ Somewhat worse ◻ Much worse INNOVATION ECONOMY OUTLOOK UK REPORT 2014 11INNOVATION ECONOMY OUTLOOK UK REPORT 2014 11 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  14. 14. Executives at young software businesses (those with less than $25 million USD in revenue) are even more optimistic, with 85 percent projecting improvement. INNOVATION ECONOMY OUTLOOK UK REPORT 2014 12INNOVATION ECONOMY OUTLOOK UK REPORT 2014 12 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  15. 15. Across the board, executives are looking within for growth in the coming year by selling new products, entering new markets and scaling operations. They are not hoping to grow by acquiring other businesses or riding the wave of improving business conditions. Plans to build from the core may not be surprising for young businesses in the innovation economy, but it is a sign of strength and another indicator of the firm roots of the UK innovation ecosystem. Thirty-seven percent of UK respondents see offering new products or entering new markets as their greatest opportunity. Scaling operations, at 30 percent, follows. All other opportunities trail by a large margin. The views of UK respondents largely echo those of their US counterparts. Building from the core 40% 35% 30% 25% 20% 15% 10% 5% 0% Greatest opportunities in 2014 MAAccess to equityBusiness conditions in existing markets Scaling operations New products or markets 37% 30% UK US INNOVATION ECONOMY OUTLOOK UK REPORT 2014 13INNOVATION ECONOMY OUTLOOK UK REPORT 2014 13 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  16. 16. UK executives are uniformly upbeat. The vast majority say business conditions in 2014 will be even better than in 2013. INNOVATION ECONOMY OUTLOOK UK REPORT 2014 14INNOVATION ECONOMY OUTLOOK UK REPORT 2014 14 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  17. 17. Although UK venture investing has rebounded to the levels we saw before the financial downturn, global venture capital will continue to flow disproportionately to the United States because the United States is a much larger market, and US-focused funds have performed better overall. Historically, a smaller pool of venture capital for start-ups has been one of the challenges facing the UK innovation economy. This is not likely to change. Even so, capital is a positive sign for the UK innovation economy, because executives have learned how to manage their businesses using the resources that are available to them. Entrepreneurs' responses to this year's survey reveal ways that they deal with the reality they face. Depending on whom you talk to, access to capital is either an opportunity or a challenge. Nine percent of the executives in the UK survey – and 21 percent of early-stage, pre-revenue businesses – see access to equity as an opportunity. An equity infusion gives growing businesses the cash they need to develop products, hire employees and extend market reach, making it a powerful growth driver for businesses that can raise money successfully and use it effectively. Managing capital with realistic expectations CONTINUED ON 17 INNOVATION ECONOMY OUTLOOK UK REPORT 2014 15INNOVATION ECONOMY OUTLOOK UK REPORT 2014 15 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  18. 18. Next source of capital Looking forward, entrepreneurs plan to reduce reliance on angel funding and government grants while increasing use of other funding types. Type of capital raised One source of strength for the UK innovation economy is an increasingly vibrant group of angel investors – private individuals, many of whom have been part of successful innovation economy businesses, who invest in very early- stage start-ups. CHAPTER 1 Managing capital with realistic expectations Venture capital Angel investor Bank debt Private equity Corporate investor Crowdfunding IPO Government grant Merger Other 6% 2% 1% 1% 5% Venture capital Angel investor Private equity Corporate investor Government grant Crowdfunding Other 61% 41% 80% 70% 60% 50% 40% 30% 20% 10% 0% Source of funding in 2013 INNOVATION ECONOMY OUTLOOK UK REPORT 2014 16INNOVATION ECONOMY OUTLOOK UK REPORT 2014 16 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  19. 19. While 15 percent of UK executives say access to equity is their top challenge, this is less than in the United States, where 21 percent call access to equity their top challenge. Executives at early-stage, pre-revenue businesses are driving the difference in views. Executives at pre-revenue US companies are twice as likely to say access to equity is their top challenge, suggesting intense competition in the United States for early-stage funding, as well as the appetite for capital among US entrepreneurs looking to reach scale quickly in a large market. Looking at those businesses that raised capital in 2013, or those that tried and failed, offers a more sanguine view of UK entrepreneurs. In both cases, UK executives report better outcomes than their US counterparts. Fifty-one percent of UK respondents successfully raised equity capital in 2013, slightly more than in the United States. While this pattern played out among both pre- revenue and revenue-generating businesses, the difference was somewhat larger for pre-revenue businesses. In a similar vein, only 6 percent of UK respondents say they tried unsuccessfully to raise capital, compared with 13 percent in the US survey. Of the businesses that successfully raised capital in 2013, UK businesses – at both pre-revenue and revenue- generating stages – were much more likely to look internationally than their US peers. Twenty-one percent of UK executives say they raised capital internationally, compared with just 8 percent in the United States. UK entrepreneurs also appear to manage with less debt. Only 14 percent of UK respondents, compared with 24 percent of US respondents, say their business obtained a loan or credit financing in 2013. Among pre-revenue businesses, debt was relatively uncommon in both geographies (9 percent in both the UK and US samples). Among revenue-generating businesses, however, one- third of US executives say they took on debt, compared with only 14 percent of UK executives. Overall, UK executives are significantly more accepting of the fundraising environment than they were in 2013, even though the number of venture capital deals closed in the UK dropped slightly from 2012 to 2013 (from 367 to 347). The percentage of executives who say the fundraising environment is extremely challenging dropped by more than half, while the number saying it is not very challenging more than doubled. CONTINUED FROM 15 Managing capital with realistic expectations CHAPTER 1 INNOVATION ECONOMY OUTLOOK UK REPORT 2014 17 CONTINUED ON 18 INNOVATION ECONOMY OUTLOOK UK REPORT 2014 17 CONTINUED ON 18 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  20. 20. In fact, UK executives who successfully raised capital in 2013 are less likely than those in the United States to say the fundraising environment is extremely challenging, and more likely to say it is either somewhat challenging or not very challenging. This UK-US distinction may reflect the fact that there are so many software businesses in the UK sample. US software executives are more positive about the fundraising environment than the overall US sample. Considering the views of revenue-generating software businesses in both geographies with revenues below $25 million USD, for example, the results are quite comparable. One source of strength for the UK innovation economy is an increasingly vibrant group of angel investors – private individuals, many of whom have been part of successful innovation economy businesses, who invest in very early-stage start-ups. While angel investing is substantial in both the United States and the UK, it was the main source of early-stage investing for the UK respondents in this year’s survey. UK executives were also more likely to say they received funding from a government grant and less likely to say they received funding from private equity or corporate investors. Looking forward, entrepreneurs plan to reduce reliance on angel funding and government grants while increasing use of other funding types. Fifteen percent of respondents expect to rely on organic growth rather than raising external capital. Managing capital with realistic expectations CHAPTER 1 INNOVATION ECONOMY OUTLOOK UK REPORT 2014 18 CONTINUED FROM 17 INNOVATION ECONOMY OUTLOOK UK REPORT 2014 18 CONTINUED FROM 17 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  21. 21. Managing capital with realistic expectations CHAPTER 1 Looking forward, 15 percent of UK executives say access to equity is their top challenge in 2014. Fifty-one percent of UK respondents raised equity capital in 2013, slightly more than in the US. Executives’ view of the fundraising environment ◻ Not very challenging ◻ Somewhat challenging ◻ Extremely challenging Access to equity: A top challenge ◻ UK ◻ US Raising equity capital ◻ UK ◻ US TRIED AND FAILED ▼ ▲ RAISED EQUITY CAPITAL UK executives who successfully raised capital in 2013 are less likely than those in the United States to say the fundraising environment is extremely challenging. 51% 48% 21% 15% 61% 14% 24% 75% UK 2014 57% 24% 19% US 2014 81% Find fundraising somewhat or extremely challenging INNOVATION ECONOMY OUTLOOK UK REPORT 2014 19INNOVATION ECONOMY OUTLOOK UK REPORT 2014 19 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  22. 22. The innovation economy continues as a powerful job creator. Eighty-four percent of UK executives say their business plans to grow in 2014. The remaining 16 percent expect to keep their workforce approximately the same. None expect to shrink. That is an even stronger showing than among US executives, 76 percent of whom expect to grow. The percentage increases for software sector and pre-revenue businesses in the United States, which are both heavily weighted in the UK sample. Thus, the UK’s strong hiring outlook may reflect geographic differences as well as the mix of the UK survey sample. Nevertheless, the intention among UK businesses to grow is an important measure of their vigour. Growth means jobs Growing in 2014? ◻ We will grow our workforce ◻ We will stay flat ◻ We will reduce our workforce UK 2014 US 2014 INNOVATION ECONOMY OUTLOOK UK REPORT 2014 20 CONTINUED ON 21 INNOVATION ECONOMY OUTLOOK UK REPORT 2014 20 CONTINUED ON 21 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  23. 23. In fact, most UK executives expect significant growth. Two-thirds of the respondents who anticipate growing in 2014 predict increases of more than 20 percent. Sixteen percent expect to at least double in size. The median expected growth rate is 50 percent in the UK compared with 30 percent in the United States. Executives at early-stage UK businesses that are not yet earning revenue are the most upbeat. Nine in 10 say they expect to hire, a larger share of respondents than for the two most growth-minded US categories: pre-revenue and software businesses. Four in 10 of these UK executives expect to at least double the size of their workforce. In total, executives at pre-revenue UK businesses project a median growth rate of 100 percent, identical to that of executives at pre-revenue US businesses and about triple that of US software executives overall. Growth means jobs CHAPTER 1 ALL RESPONDENTS: EXPECT WORKFORCE TO GROW BY PRE-REVENUE: EXPECT WORKFORCE TO GROW BY 100%51%- 100%21%- 50%1%- 20% 31% 28% 25% 16% UK 100%51%- 100%21%- 50%1%- 20% 10% 24% 29% 37% UK 100%51%- 100%21%- 50%1%- 20% 36% 32% 18% 14% US 100%51%- 100%21%- 50%1%- 20% 18% 27% 24% 30% US Expected workforce growth In total, executives at pre-revenue UK businesses project a median growth rate of 100 percent, identical to that of executives at pre-revenue US businesses and about triple that of US software executives overall. INNOVATION ECONOMY OUTLOOK UK REPORT 2014 21 CONTINUED FROM 20 INNOVATION ECONOMY OUTLOOK UK REPORT 2014 21 CONTINUED FROM 20 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  24. 24. Clearly, the foundation for a vibrant UK innovation economy is solid. The UK has a critical mass of well-performing businesses. Executives are optimistic about the future and are demonstrating their capacity to build businesses with the capital that is available to them. Together, this means a strong pipeline for job creation. The challenge now is to translate this potential into stronger businesses that together create the critical mass for a successful innovation economy. UK innovation economy executives say their two biggest challenges in 2014 are scaling their operations and recruiting and managing talent. These are two of the top three challenges most often cited by US executives (access to equity is the third), but UK executives give scaling operations and recruiting/managing talent even greater emphasis. Because scaling operations involves people, the core challenge is very much a matter of finding and retaining talent. Across the board, innovation economy executives say hiring is a major problem, even more so than last year. Ninety-four percent of UK respondents consider it extremely or somewhat challenging to find the talent they need to grow, the same as US software executives. Across the survey, in the United States and globally, the proportion is only slightly smaller, with 89 percent calling the search for talent extremely or somewhat challenging. Two familiar forces are driving this situation: supply and demand. On the supply side, innovation economy businesses, particularly younger start-ups, draw heavily on people with sciences, technology, engineering and maths (STEM) skills. This talent pool has not grown rapidly enough to meet increased demand. On the demand side, the strength of the innovation economy – the large number of start-ups being funded and the strong performance among later-stage businesses – means competition for talent is fierce. Respondents cite skills and education as the most challenging aspect of finding and retaining people to help them grow their businesses. Experience comes second, followed by salary and benefits. The challenge: Scaling up CHAPTER2 Silicon Valley Bank’s Innovation Economy Outlook 2014 UK Report CONTINUED ON 24 Top hiring challenges ◻ Skills and education ◻ Experience ◻ Salary and benefits ◻ Candidates prefer businesses of a different size ◻ Location ◻ Other 31% 27% 25% 5% 3% 9% INNOVATION ECONOMY OUTLOOK UK REPORT 2014 22INNOVATION ECONOMY OUTLOOK UK REPORT 2014 22 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  25. 25. The challenge: Scaling up CHAPTER 2 Greatest challenges in 2014: UK vs. US UK innovation economy executives say their two biggest challenges in 2014 are scaling their operations and recruiting and managing talent. Regulatory/political environment New products or markets Access to creditBusiness conditions in existing markets CompetitionAccess to equityRecruiting employees and managing talent Scaling operations 27% 22%24% 15% 30% 25% 20% 15 % 10 % 5 % 0 % UK US INNOVATION ECONOMY OUTLOOK UK REPORT 2014 23INNOVATION ECONOMY OUTLOOK UK REPORT 2014 23 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  26. 26. The challenge: Scaling up CHAPTER 2 CONTINUED FROM 22 When it comes to top challenges in hiring — skills, education and experience — UK respondents, like US software respondents, put skills and education at the top of the list. The broader US population reverses the order, listing experience as the greatest challenge. In terms of skills and experience, UK executives — like their US counterparts — tend to focus primarily on experienced workers with STEM skills. Yet finding workers with experience is especially difficult in the relatively younger UK innovation economy, where the talent pool has had less time to develop and there are fewer large innovation economy businesses to spin off experienced employees. As the charts show, UK executives are more likely to seek entry-level employees than their peers in the United States. This may be a response to the relative shortage of experienced employees with relevant skills (since, as in the United States, immigration restrictions make it challenging to hire foreign employees, even those with experience). It may also be a way to protect the bottom line – by relying on entry-level employees, businesses can spend scarce pounds more efficiently. The emphasis on experienced workers with STEM skills wanes as businesses mature and need broader capabilities. But even at this later stage, most of the jobs will go to experienced workers with STEM skills. Is finding talent challenging? Ninety-four percent of UK respondents consider it extremely or somewhat challenging to find the talent they need to grow. 2013 SURVEY 51%Somewhat challenging 38% Extremely challenging 11% Not very challenging 2014 SURVEY 69%Somewhat challenging 25% Extremely challenging 6% Not very challenging INNOVATION ECONOMY OUTLOOK UK REPORT 2014 24INNOVATION ECONOMY OUTLOOK UK REPORT 2014 24 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  27. 27. The challenge: Scaling up CHAPTER 2 UK REVENUE-GENERATING 41%Experienced STEM 15% Entry-level STEM 36% Experienced non-STEM 8% Entry-level non-STEM UK ALL 46%Experienced STEM (53% US) 14% Entry level STEM (9% US) 28% Experienced non-STEM (30% US) 12% Entry-level non-STEM (8% US) UK PRE-REVENUE 62%Experienced STEM 10% Entry-level STEM 10% Experienced non-STEM 18% Entry-level non-STEM Jobs and hiringHiring: Looking for experience, looking for STEM skills UK US Non-STEM STEM 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% SKILL SETS IN HIGHEST DEMAND IN 2014 Entry-level Experienced 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% ENTRY-LEVEL VS. EXPERIENCE UK executives are more likely to seek entry-level employees than their peers in the United States. 60% 74% 40% 26% INNOVATION ECONOMY OUTLOOK UK REPORT 2014 25INNOVATION ECONOMY OUTLOOK UK REPORT 2014 25 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  28. 28. Because scaling operations involves people, the core challenge is very much a matter of finding and retaining talent. INNOVATION ECONOMY OUTLOOK UK REPORT 2014 26INNOVATION ECONOMY OUTLOOK UK REPORT 2014 26 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  29. 29. UK innovation economy businesses want to make their mark at home. At the same time, they see the benefits of extending their reach more broadly by tapping into large sales markets abroad (particularly the United States), accessing new pools of skilled employees and augmenting the capital available domestically in the UK. To envision the shape of the UK innovation economy in the future, consider the words of Thomas Friedman: “The world is flat.” In all aspects of their business, UK innovation businesses are more internationally focused than their US peers. Although a majority of UK businesses expect most of their 2014 revenue growth to come from within the UK, 41 percent are looking beyond their shores for growth, and virtually all of those (88 percent) are looking to the United States. When it comes to hiring, UK businesses look primarily at home for talent, but 9 percent say they expect to hire in the United States in 2014. Looking forward, UK innovation businesses plan to extend their reach in 2014, increasing the gap between UK businesses and their US counterparts. For both sales and service, UK executives are 20 percent more likely to say their business is now active abroad, or will be in the next 12 months, compared with US executives. What international locations are most appealing to UK entrepreneurs for doing business internationally? Asia may come to mind first, but the United States remains the primary draw for sales growth and talent. This makes good business sense for UK executives, given the size of the US market, common language and relatively comparable business environments. Connecting to the global innovation economy CHAPTER3 Silicon Valley Bank’s Innovation Economy Outlook 2014 U.K. Report 3 2 S E I Z I N G T H E O P P O R T U N I T Y A T H A N D INNOVATION ECONOMY OUTLOOK UK REPORT 2014 27 CONTINUED ON 28 INNOVATION ECONOMY OUTLOOK UK REPORT 2014 27 CONTINUED ON 28 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  30. 30. Many UK executives also are considering service centres in the United States to support their sales. For production, Europe and Asia garner the greatest interest, led by Eastern Europe (20 percent) and China (17 percent). The United States and India tie for third place, at 7 percent each. Perhaps most notably, a full third of UK executives have no preference (compared with only 14 percent of US executives). For many executives, research and development represents the crown jewel of the innovation economy. For this, however, a preponderance of UK respondents have no geographical preference. Of those who do, most prefer to stay closer to home. US executives are much more likely to express a preference and twice as likely to look to Asia (especially India) for research and development. Connecting to the global innovation economy CHAPTER 3 2014 projected revenue growth: UK businesses ◻ UK ◻ US ◻ Asia ◻ Europe Top hiring locations ◻ UK ◻ US ◻ Western Europe ◻ Eastern Europe 3%2% 9% 1% 1% 36% 59% 89% INNOVATION ECONOMY OUTLOOK UK REPORT 2014 28 CONTINUED FROM 27 INNOVATION ECONOMY OUTLOOK UK REPORT 2014 28 CONTINUED FROM 27 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  31. 31. Connecting to the global innovation economy CHAPTER 3 International footprint by activity UK ◻ Currently ◻ Next 12 months US ◻ Currently ◻ Next 12 months Research and development Production, including coding and manufacturing Service locations Sales 80% 70% 60% 50% 40% 30% 20% 10% 0% 35%39% 11% 8% 14% 4% 6% 8% 14% 47% 53% 39% 36% 44% 52% 25% UK executives are 20 percent more likely than their US counterparts to say their business is now active abroad or will be in the next 12 months. INNOVATION ECONOMY OUTLOOK UK REPORT 2014 29INNOVATION ECONOMY OUTLOOK UK REPORT 2014 29 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  32. 32. To envision the shape of the UK innovation economy, consider the words of Thomas Friedman: “The world is flat.” INNOVATION ECONOMY OUTLOOK UK REPORT 2014 30INNOVATION ECONOMY OUTLOOK UK REPORT 2014 30 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  33. 33. Connecting to the global innovation economy CHAPTER 3 Most appealing international locations by activity ◻ US ◻ Europe ◻ Asia ◻ No preference 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 50%48% 37% 39% SalesResearch and development Production Service Other Americas and Middle East categories were omitted from the chart as they were less than 5% in any measure. INNOVATION ECONOMY OUTLOOK UK REPORT 2014 31INNOVATION ECONOMY OUTLOOK UK REPORT 2014 31 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  34. 34. The UK at last has the makings of a vibrant innovation economy. Entrepreneurs are turning their passion and ingenuity into breakout businesses. The innovation ecosystem is fueling their success by providing early-stage funding and global opportunities. Businesses are making the most of this momentum through careful management of financial resources – and expectations. The next steps include continuing to make smart choices about where and how to grow. By thinking about growth using a “both-and” mind-set, UK entrepreneurs can maximize their potential. They can draw upon an increasingly vibrant local scene. And when it makes sense, they can look farther afield to drive top-line revenue growth or find the talent and later-stage capital they need to succeed. Doing so will generate and support the continued economic and jobs growth that makes the global innovation economy such a powerful phenomenon. Seizing the opportunity at hand INNOVATION ECONOMY OUTLOOK UK REPORT 2014 32INNOVATION ECONOMY OUTLOOK UK REPORT 2014 32 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  35. 35. Entrepreneurs are turning their passion and ingenuity into breakout businesses. INNOVATION ECONOMY OUTLOOK UK REPORT 2014 33INNOVATION ECONOMY OUTLOOK UK REPORT 2014 33 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  36. 36. The Innovation Economy Outlook 2014 is Silicon Valley Bank’s fifth annual report based on its survey of executives in the innovation economy. When we launched the survey and report in 2010, we focused on United States start-ups – businesses with up to $50 million USD in revenue and fewer than 500 employees. Not surprisingly, given our focus, we named our findings Startup Outlook. As SVB has grown by serving entrepreneurs and high-growth businesses of all sizes around the world, so has our survey. Last year, we added start-ups in the UK. This year, we expanded the survey to include executives covering the full depth and breadth of the markets we serve, including executives in larger businesses and from around the world. In light of our expanded focus, we have renamed our report the Innovation Economy Outlook. This report focuses on the innovation economy in the UK. In light of the deep connections between the United States and UK markets, we also compare the views of UK respondents with those of their counterparts in the United States. This is a companion to two other reports based on survey findings: one focused on the United States and the other offering a global overview. In each, we examine the views of executives on the business environment, the outlook for 2014 and the opportunities and challenges ahead. In addition to the three comprehensive reports, we are issuing targeted reports that look at executives’ views by industry sector, business stage and geography. We will also examine key public policy issues, the representation of women in the innovation economy and the ties across geographies that link innovation economy businesses. We are grateful to the 1,200 executives around the world who took the time to answer this year’s survey. Through them, we hope we will encourage others to see how much the future has to offer to those willing to do the hard work that drives the innovation economy. BACKGROUND About Silicon Valley Bank’s Innovation Economy Outlook 2014 All reports are available at www.svb.com 3 6 A S N A P S H O T O F S U R V E Y R E S P O N D E N T S INNOVATION ECONOMY OUTLOOK UK REPORT 2014 34INNOVATION ECONOMY OUTLOOK UK REPORT 2014 34 V I E W R E P O R T S BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  37. 37. “2014 is the year my company will develop a working prototype. There is immense interest in the company from established players but we are not ready for them.” — CEO, MEDICAL DEVICE BUSINESS “We hope to renew our financing facilities with SVB this year and expect to increase the level of our FX hedging.” — CFO, ENTERPRISE SOFTWARE BUSINESS “Overall very positive – we’re predicting around 80 percent growth.” — CFO, ENTERPRISE SOFTWARE BUSINESS INNOVATION ECONOMY OUTLOOK UK REPORT 2014 35INNOVATION ECONOMY OUTLOOK UK REPORT 2014 35 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  38. 38. SNAPSHOT UK survey respondents The 2014 survey reflects the views of 100 executives with UK-based high-growth technology and healthcare businesses. More than half of the respondents are CEOs, and 85 percent are C-level executives (CEO, COO, CTO or CFO), comparable numbers to the much larger US survey. An overwhelming majority of UK respondents come from the software sector. We see more parity in sector distribution than is reflected here and believe healthcare businesses in particular are underrepresented in this year’s sample. A larger sample size would likely produce a more balanced distribution of industry representation in the UK economy. In general, the US sample (1,004 executives) draws more broadly from different sectors and includes a somewhat greater proportion of larger businesses. Since software executives tend to be more optimistic, and younger businesses face different opportunities and challenges than mature ones, these differences are important in understanding the survey responses. UK US PERCENTAGE OF RESPONDENTS BY SECTOR ◻ Software ◻ Hardware ◻ Healthcare ◻ Other 7% 82% 9% 2% 1000+500-999250-499100-249Fewer than 10 10-24 25-49 50-99 50% 39% 21 10 1% 4% 2% 9%8%9% 17% 15% 13% 11% 13% 5% 2% 2% Company size based on number of employees MEDIAN NUMBER OF EMPLOYEES: US MEDIAN NUMBER OF EMPLOYEES: UK INNOVATION ECONOMY OUTLOOK UK REPORT 2014 36INNOVATION ECONOMY OUTLOOK UK REPORT 2014 36 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  39. 39. A snapshot of UK survey respondents SNAPSHOT Publicly traded vs. privately held 100% $1.9M $7.0M US ◻ Profitable ◻ Not yet profitable Percentage of profitable businesses UK ◻ Profitable ◻ Not yet profitable UK US 60 Pre-revenue Less than $5M USD $5M - $24.9M $50M+ Business size based on revenue $25M - $49.9M 25% 31% 32% 53% MEDIAN UK REVENUES (USD) MEDIAN US REVENUES (USD) 21% 10% 6% 4% 10% 8% 46%43% 57% 54% Privately held 96%Privately held 4% Publicly traded INNOVATION ECONOMY OUTLOOK UK REPORT 2014 37INNOVATION ECONOMY OUTLOOK UK REPORT 2014 37 BACK NEXT A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
  40. 40. Special thanks to dcIQ for your collaboration on this study. Thank you for your support: Entrepreneur First Level 39 Techhub Seedcamp Techstars Startupbootcamp Acknowledgments ©2014 SVB Financial Group. All rights reserved. Silicon Valley Bank is a member of FDIC and Federal Reserve System. SVB, SVBFind a way, SVB Financial Group, and Silicon Valley Bank are registered trademarks. A third-party firm, QA Research, conducted the survey online on our behalf from January 8 through January 29, 2014. Silicon Valley Bank is registered in England and Wales at 41 Lothbury, London, EC2R 7HF, UK under No. FC029579. Silicon Valley Bank is authorised and regulated by the California Department of Financial Institutions and the United States Federal Reserve Bank; authorised by the Prudential Regulation Authority with number 577295; and subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details about the extent of our regulation by the Prudential Regulation Authority are available from us on request. INNOVATION ECONOMY OUTLOOK UK REPORT 2014 38INNOVATION ECONOMY OUTLOOK UK REPORT 2014 38 BACK A B O U T T H I S R E P O R TI N T R O D U C T I O N H I T T I N G I T S S T R I D E S C A L I N G U P C O N N E C T I N G
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