Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Life Science and Healthcare Startup Outlook 2017

528 views

Published on

Silicon Valley Bank's Life Science and Healthcare Startup Outlook Report examines how the industry's executives view 2017's opportunities and challenges. The report includes startups' thoughts on public policy issues as well as their expectations for fundraising and hiring.

  • Be the first to comment

Life Science and Healthcare Startup Outlook 2017

  1. 1. @SVB_Financial #StartupOutlook Startup Outlook 2017 Life Science and Healthcare Report Key Insights from Silicon Valley Bank’s Startup Outlook Survey
  2. 2. Startup Outlook 2017 – Life Science and Healthcare Report 1 I’m pleased to present Silicon Valley Bank’s Startup Outlook 2017 — Life Science and Healthcare, an outgrowth of the bank’s annual survey of innovation economy executives. This year, we are publishing a healthcare- specific report to highlight what life science and healthcare executives are thinking about the future of their businesses and how public policy impacts them. While our survey mostly captures the sentiment of U.S. executives, my travels last year in China and conversations with healthcare bankers in the U.K. and EU underscore that this is a highly dynamic, fast-changing global industry — with significant opportunities for entrepreneurs and investors. Overall, executives are expressing cautious optimism as we witness significant political and industry transitions around the globe. Additionally, in the U.S., the life science and healthcare industry is buffeted by uncertainty prompted by a volatile regulatory environment and unclear future of healthcare reform. In China, we see strong demand for innovation, and investors and corporates alike continue to cast a global net to gain access to transformative therapies. In the U.K., Brexit is leading healthcare companies to reevaluate their options. Still, the promise of delivering new therapies, earlier interventions and innovative care models is driving innovation at a fast clip. Highlights include: • Nearly 60 percent of life science and healthcare startups expect business conditions to improve in 2017, similar to findings for non‑healthcare tech executives. • While a large majority of executives say hiring is challenging and identify access to talent as their top public policy priority, three of four healthcare startups plan to grow their workforce this year. • Asked for their top healthcare-related public policy concerns, U.S. respondents named reimbursement and FDA regulation as the top two. • A higher percentage of life science and healthcare companies cite acquisition as their long-term goal than other technology companies. • And a higher percentage than other tech companies say fundraising is “extremely challenging.” We plan to use these findings to help inform policymakers about how to support companies such as yours. We hope the Startup Outlook 2017 — Life Science and Healthcare and additional reports from the U.S., U.K. and China offer you insights and relative benchmarks as you chart your business’ course in the year ahead. David M. Sabow Head of Life Science and Healthcare, Client Funds and Products Silicon Valley Bank Optimism in the face of uncertainty LETTERFROMDAVIDM.SABOW
  3. 3. Startup Outlook 2017 – Life Science and Healthcare Report 2 59+36+5+z Life science and healthcare startups are cautiously optimistic 59% of life science and healthcare startups say they expect business conditions to improve in 2017, and only 5% think conditions will worsen, on par with findings for other tech startups. Describe your outlook on business conditions for your company this year compared to last: 36% Will stay the same 5% Will be worse 59% Will be better BUSINESSCONDITIONS
  4. 4. Startup Outlook 2017 – Life Science and Healthcare Report 3 More life science and healthcare startups find fundraising “extremely challenging” Fundraising is difficult for all startups, but 28% of life science and healthcare startups say it is “extremely challenging,” compared to 18% for other tech companies. Life science and healthcare startups typically require more capital upfront than consumer internet companies and take longer to scale, so fundraising is more difficult. What is your view of the current fundraising environment?   Life science and healthcare   Other tech companies Extremely challenging 28% 18% FUNDING
  5. 5. Startup Outlook 2017 – Life Science and Healthcare Report 4 After VC, life science and healthcare startups rely on corporate and private equity investors Overwhelmingly, startups expect their next round of financing to come from VCs. For life science and healthcare companies, corporate and private equity investors also play meaningful roles: Corporate investors often invest in and partner with life science and healthcare startups as a means of getting access to the latest R&D. What do you expect to be your life science or healthcare company’s next source of funding? Note: Other includes government grant, IPO, crowdfunding and organic growth 15%16% 42% 7% 7% 7% 3%3% Venture capital Corporate investor Private equity Angel/ micro VC Individual investors* Bank debt Merger Other *including founders, friends, family, individual angels FUNDING
  6. 6. 53+17+20+10E 45+22+20+13E Startup Outlook 2017 – Life Science and Healthcare Report 5 Majority of life science and healthcare startups expect to be acquired Acquisition is the dominant realistic, long- term exit strategy of startups. That is even truer for life science and healthcare startups: 53% expect to be acquired, compared to 45% for other tech companies. This could be a reflection of the narrower IPO window life science and healthcare companies have experienced over the recent past, compared to the increased public market appetite for technology offerings. What is the realistic long-term goal for your company? 45% Acquisition 20% Stay private 13% Don’t know 22% Become a publicly traded company 53% Acquisition 10% Don’t know 17% Stay private 20% Become a publicly traded company Life science and healthcare Other tech companies FUNDING
  7. 7. Startup Outlook 2017 – Life Science and Healthcare Report 6 Life science and healthcare startups expect M&A to be strong in 2017 Nine of 10 life science and healthcare startups predict as many or more mergers and acquisitions in 2017. While drivers clearly differ by subsector across life science and healthcare, this may be a reflection of the balance sheet strength of corporates. How do you think the M&A market will change in 2017? 50+10+40+z40% No change 10% Fewer acquisitions 50% Expect more acquisitions FUNDING
  8. 8. Startup Outlook 2017 – Life Science and Healthcare Report 7 Life science and healthcare startups continue to hire A large majority of life science and healthcare startups plan to expand their teams in 2017. For 91% of these startups, finding the right talent is challenging. What are your projections for hiring new employees this year? 73+26+1+z 1% We will reduce our workforce26% We will keep our workforce approximately at the current level 73% We will grow our workforce HIRINGANDTALENT
  9. 9. Startup Outlook 2017 – Life Science and Healthcare Report 8 Access to talent is top policy concern for life science and healthcare startups With finding skilled workers so difficult, life science and healthcare startups named access to talent as the top public policy issue affecting companies like theirs. Healthcare costs are second. Access to talent Healthcare costs for employees Corporate taxes Patent litigation Cybersecurity International trade (e.g., TPP) Banking/payments regulation Classification of employees vs. independent contractors Consumer privacy When asked about top issues specifically related to life science and healthcare companies, U.S. executives said: 39% Reimbursement 38% FDA regulation 18% Affordable Care Act implementation 5% Other What are the most important public policy issues affecting companies like yours? 52% 40% 37% 33% 21% 17% 12% 12% 10% Note: Respondents were given the opportunity to select multiple responses. PUBLICPOLICY
  10. 10. Startup Outlook 2017 – Life Science and Healthcare Report Life science and healthcare startups have more women in leadership than other tech companies Nearly 60% of life science and healthcare startups have at least one woman in a C-level position. That is considerably higher than the 45% for other tech companies. Percentage of startups with women in leadership positions: % with at least one woman in C-level % with at least one woman on board 59% 45% 31% 36%   Life science and healthcare   Other tech companies 9 HIRINGTALENT
  11. 11. Startup Outlook 2017 – Life Science and Healthcare Report 10 27+73C Policy is driving some life science and healthcare startup operations offshore About one in four respondents say that regulations prompted them to locate facilities or move non‑sales operations outside their home country. Have laws and regulations materially affected your company’s decision to locate facilities or hire employees for operational non-sales activities outside your home country? 38% Regulatory environment 18% Immigration policy 44% Tax policy27% Here’s why Hired or moved operations offshore Yes PUBLICPOLICY
  12. 12. Startup Outlook 2017 – Life Science and Healthcare Report 11 Industry sector Profitable 56% Yes 44% No Ownership 69% Technology (net) 15% Healthcare (net) 16% Other Revenue stage Total respondents 941 Primary 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 ABOUTTHESURVEY 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 15% of the total respondents were life science and healthcare executives. 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.
  13. 13. 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 Bank For more than 30 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. The Life Science and Healthcare Division of Silicon Valley Bank delivers specialized solutions and market expertise in the areas of biopharma, medical device, tools and diagnostics, digital health and healthcare services. Learn more at svb.com/startup-outlook-report

×