UK STARTUPS EVALUATE OPTIONS DUE TO BREXIT

One in four startups plan to open a European outpost, according to Silicon Valley Bank’s annual Startup Outlook report

Silicon Valley Bank (SVB), the bank of the world’s most innovative businesses and their investors, released its ninth annual Startup Outlook report today. The report is based on a survey that gauges the perceptions of technology and healthcare startups on business conditions, Brexit, fundraising, hiring and policy issues. This year’s survey includes responses from more than 1,000 startup founders and executives, primarily in the UK, US and China.

“Eighteen months on from the Brexit vote, the UK remains a strong pillar for innovation in Europe,” said Phil Cox, Head of EMEA and President of Silicon Valley Bank’s UK Branch. “Despite uncertainty, entrepreneurs and startups are forging ahead, creating jobs and raising capital to enhance the UK’s global competitiveness. Whilst one in four will be opening a European outpost – up from one in five in 2017 – slightly more than half of UK startups do not plan to expand outside of Britain. Despite challenges relating to regulation, cybersecurity and consumer privacy issues, many UK startups are of the opinion that 2018 will be better than 2017.”

Cox continued: “UK startups say that access to talent continues to be their greatest concern, and ongoing Brexit negotiations lead to uncertainty around the future of immigration and international trade. However, efforts are under way to help ensure that startups are still able to attract and employ the best talent. For example, the UK government announced in November that it would be doubling the number of specialist technology visas available to high-skilled workers entering the UK from outside the EU. This will be a significant boost to British startups that have feared a post-Brexit skills shortage and underscores that the UK continues to be a strong place to start and grow a business.”

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Following are the key findings from the UK Startup Outlook 2018 report, analysing the sentiment of UK-based startups:

Brexit

  • While 53 percent say they don’t plan to expand outside of Britain, one in four (25 percent) UK startups do expect to establish a European outpost– up from one in five (21 percent) in 2017
  • Of that group, 14 percent may move their headquarters to Europe (up from 11 percent last year), whilst 6 percent will consider locations outside of the UK and Europe

Talent

  • 82 percent of startups say that access to talent is the most important public policy issue affecting companies like theirs, followed by international trade (46 percent) and cybersecurity (36 percent)
  • 95 percent of startups report that it is somewhat or extremely challenging to find workers with the skills needed to grow their businesses
  • 83 percent of startups plan to expand their workforces in 2018

Business conditions and Public Policy

  • Almost half of respondents (49 percent) say they believe business conditions will improve in 2018 when compared to 2017; 9 percent expect conditions to worsen
  • Cybersecurity (36 percent) and consumer privacy (31 percent) are growing issues due to concern over extra strain on time and budget to comply with new EU regulations such as the General Data Protection Regulation (GDPR)

Fundraising

  • 72 percent say the fundraising environment is somewhat or extremely challenging
  • However, 28 percent feel the fundraising environment is not challenging (up from 19 percent last year, indicating fundraising is getting easier)
  • 70 percent of startups believe that the outlook for international fundraising will stay the same or improve in 2018
  • 47 percent of startups expect their next source of funding to come from venture capital, down from 56 percent in 2017
  • 49 percent say their realistic long-term goal is to be acquired (compared to 55 percent in 2017); while 21 percent expect to pursue an IPO (compared to 16 percent in 2017)
  • 89 percent of startups expect to see at least as many acquisitions in 2018 as last year, compared to 85 percent in 2017

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