2012 was an Olympic year for tech start-ups with 1 in 5 smashing revenue targets and hopes are even higher for 2013. Clearly the UK tech scene, is doing better than its Silicon Valley counterparts, with double the amount of UK companies expecting to be profitable in 2013. Silicon Valley attributes this to the establishment of Tech City and Google Campus, tax incentives, and corporate backing all helping fuel the boom.
Eighty three percent of technology startups in the UK anticipate positive business conditions in 2013, according to a report by Silicon Valley Bank, financial partner to technology, life science and cleantech businesses and their investors worldwide. Silicon Valley Bank surveyed UK based startups to gauge their perspectives on local business conditions and opportunities and challenges including hiring, raising capital and government support.
- The views of UK and US tech SMEs around revenue and profitability.
- Their recruitment plans in job creation ambitions and skills sought.
- Their experience of the fundraising environment.
- Their views on government support around funding, tax, visa regulations and employment law.
See Interactive Startup Outlook UK Report here.
Startup executives are positive about the coming year, following a strong 2012. Sixty six percent of the respondents report that business conditions had improved in 2012 compared to 2011 and 73% met or exceeded revenue targets last year. Of UK startups earning revenue, nearly half expect their company to be profitable this year, while just 26% of their US counterparts report the same.
Joshua March, Co-Founder and CEO of startup social media business Conversocial says: “The tech scene in London has evolved dramatically since we started working on Conversocial in 2009. One of the most exciting changes is how much easier it is to hire great developers than just a few years ago. Undertakings like Silicon Milkroundabout and the Tech City initiative, backed by so much government and press support, have turned ‘startups’ into a viable career path.”
Hiring is a key priority for UK based startups. Nine out of ten survey respondents plan to hire and 77% say that finding workers with STEM (Science, Technology, Engineering and Maths) skills is absolutely critical to the success of their business.
Despite the positive outlook, the potential for growth could be hampered by continuing stagnation in the UK fundraising environment. Thirty-nine percent of respondents say they are looking to raise capital from venture capital and angel investors, yet the Startup Outlook findings reveal that there is a significant funding gap between Seed and Series A funding.
Startup executives say that reform of government initiatives would have a role to play in growing and supporting their industry sector. More than half (56%) want greater access to government grants and funds designed specifically for startups, while 52% would like to see tax reforms.
Commenting on the research, Bindi Karia, Vice President at Silicon Valley Bank says: “The tech startup sector is thriving, with one in five businesses beating their revenue targets for 2012, and another strong year predicted for 2013. The flipside is that many executives have concerns around how they should fuel the next level of growth, since access to funding and talent are cited as challenges for many startups. Nevertheless, these are exciting times for the UK tech scene. Executives are optimistic and working hard to develop the ‘next big thing.’”
The interactive UK Startup Outlook report is available here and you can follow the conversation on Twitter at @SVB_UK and @SVB_Financial #StartupOutlook.
About Silicon Valley Bank
Silicon Valley Bank is the premier bank for technology, life science, cleantech, venture capital, private equity and premium wine businesses. SVB provides industry knowledge and connections, financing, treasury management, corporate investment and international banking services to its clients worldwide through 28 U.S. offices and six international operations. (Nasdaq: SIVB)www.svb.com.
Today, Silicon Valley Bank works with about half of all venture-capital backed businesses in the US, servicing them as they grow into mature, multi-national corporations and increasing their probability of success along the way. Silicon Valley Bank works with innovative businesses through its offices in the UK, US, China, Israel and India. Over the years, Silicon Valley Bank has worked with companies including Mozilla, Pinterest, Cisco and Amazon and today is proud to work with companies including Shazam and WHO from its commercial banking branch in London, which opened in June 2012.
About the research
Independent market research firm, Koski Research, conducted the online Startup Outlook survey for Silicon Valley Bank in December 2012 involving 125 start-up businesses. For the purposes of this study, UK startups are primarily defined as companies in the innovation sector with less than £25 million in annual revenue and fewer than 100 employees. Silicon Valley Bank completed a similar survey of startup executives in the US for the fourth straight year, which is available here.
Hayden Richards is Contributor of IntelligentHQ. He specialises in finance, trading, investment, and technology, with expertise in both buy-side, sell-side. Contributing and advising various global corporations, Hayden is a thought leader, researching on global regulatory subjects, digital, social media strategies and new trends for Businesses, Capital Markets and Financial Services.
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