Tech start-ups' biggest challenges are scaling operations, talent acquisition and access to equity capital - report

By Sooraj Shah
29 Apr 2014 View Comments
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Scaling operations, hiring the right talent and access to equity capital are the top three challenges for technology start-ups, according to a global survey conducted by Silicon Valley Bank.

The bank undertook its fifth annual Innovation Economy Outlook study, based on an annual survey of more than 1,200 executives from software, hardware, cleantech and healthcare companies in start-up and growth stages of business in the US, UK and other "global innovation hubs".

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The survey found that two-thirds of companies met or beat revenue targets in 2013, and that 82 per cent of businesses believe conditions will be better in 2014 than they were in 2013 - the bank said that this was the highest rate of optimism in five years.

The companies said that talent acquisition was one of their biggest challenges. But while hiring is a challenge everywhere, it was more of a challenge outside of the US, the bank found. Despite the problems with hiring, 77 per cent of firms expect to grow their workforces by a median of 30 per cent.

In the UK, 84 per cent of executives said their business will take on more staff in 2014, with the remaining 16 per cent expecting to keep their workforce about the same - none expects to downsize. The median expected growth rate is 50 per cent in the UK compared with 30 per cent in the US.

UK respondents cited skills and education as the most challenging aspect of finding and retaining people to help them grow their businesses. Experience came second, followed by salary and benefits.

Access to equity capital was another of the biggest challenges. Those firms (81 per cent) who had successfully raised private capital said the process was challenging. The study found that angel capital was the most commonly used source of private capital outside of the US.

Executives in the UK are looking to offer new products or enter new markets as their two main instigators for growth. Scaling operations, at 30 per cent, follows, with other opportunities such as M&A and access to equity trailing by a large margin.

"For the UK economy, the opportunity is clear," said president and chief executive officer of Silicon Valley Bank, Greg Becker. "If the UK can meet the needs of rapidly growing innovation economy businesses at home and help them tap into global markets, it will reap the benefits of jobs and economic growth."

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