New survey from Silicon Valley Bank reveals positivity over business conditions in 2013
There certainly seems to be some positive sounds coming from the world of tech start-ups recently. The launch of the Royal Academy of Engineering’s Enterprise Hub is one thing, but we now have some equally encouraging news to boot from our pals at Silicon Valley Bank (SVB). The financial solutions provider has conducted a survey of 125 UK-based start-ups to gauge their perspectives on local business conditions, and opportunities and challenges including hiring, raising capital and government support. Needless to say, one can’t help but feel a little twinge of optimism upon hearing that 83% of those surveyed anticipate positive business conditions in 2013. Moreover, 66% reported an improvement in 2012 compared to 2011, and 73% said they met or exceeded revenue targets last year, with a further 30% saying they were profitable. And of those UK start-ups earning revenue, nearly half expect their company to be profitable this year, while just 26% of their US counterparts report the same.
Happy days you may think, but is probably worth stepping back at this point and applying a healthy dose of perspective to proceedings. For all the positivity, SVB suggests the potential for growth among our tech start-ups could be hampered by continuing stagnation in the UK fundraising environment. Take into account for instance that while 39% of respondents said they are looking to raise capital from venture capital and angel investors, the UK Startup Outlook Survey reveals a significant funding gap between Seed and Series A funding. It is unsurprising then that 90% of respondents said that securing start-up funding was either somewhat challenging (54%) or extremely challenging (36%).
So what can or should be done to stem this tide of funding frustrations, and other grievances? Well, as one would expect, the government is the first port of call. More than half (56%) of respondents want greater access to government grants and funds designed specifically for startups, while 52% would like to see tax reforms. A further 31% want easier access to employment visas, with 25% believing employment law changes such as the touted owner-employee initiative could make all the difference. And 19% identify an improved regulatory environment and communications infrastructure. When it comes down to it though, the majority of start-up executives believe the government has a role to play in helping them out.
As well as funding, the other challenge our start-ups our facing is the availability of workers with the appropriate skillset, corroborating with the findings of PricewaterhouseCooper’s 16th Global CEO Study, published earlier this week. SVB found 89% of respondents admitting it is “challenging” to find employees with the skills needed to grow their businesses. Engineering, along with marketing and sales were identified as the hardest skills to locate, coming in at 69% and 41% respectively, but there is little doubt which skills are the most critical to our tech start-up execs; 77% identified STEM (Science, Technology and Maths) skills as indispensable. When this is all played off against the fact that 87% of employers are planning to take on new workers in 2013, you have to wonder how that statistic will compare to the percentage who have actually hired come the end of the year.
Similarly, 17% of respondents mentioned recruiting the right talent as a challenge, with a quarter identifying scaling their business as a key test. But executives are concerned about how they are going to fuel this next level of growth and – surprise surprise – access to funding was cited as the biggest challenge by another quarter of participants.
We can see a recurring theme here then. Whilst start-ups are optimistic about the year ahead, with many believing that new markets and products lay just around the corner, they could do with a little bit more assistance from the powers that be, so that they can really take those opportunities by the scruff of the neck. We live in hope…