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.

1. @SVB_Financial #StartupOutlook
Startup Outlook 2017
Life Science and Healthcare Report
Key Insights from Silicon Valley Bank’s Startup Outlook Survey

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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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).
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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