UK startups are less confident than a year ago that business conditions will improve. Most say a split from the EU would have a negative impact on the UK innovation economy. Ongoing unpredictability is likely to affect access to talent, international trade and international capital. Still, innovation is moving ahead. A large majority of startups report healthy domestic fundraising and 2019 hiring plans. More good news: Women are moving into startup leadership positions. Looking ahead, we asked which technologies will have the most promise in a decade: UK startups say AI, digital health and life science.

1. UK Startup
Outlook 2019
Key insights from the Silicon Valley Bank
Startup Outlook Survey

2. LETTER FROM SVB CEO
Startups are focused on innovating
despite uncertainty
For the 10th year, Silicon Valley Bank is proud to present our Startup Outlook
Report. The innovation economy has expanded greatly in the US and abroad in
the past decade, and so has Startup Outlook. In our first report, we surveyed 300
people, most of them in California. The 2019 report includes the perspectives
of nearly 1,400 technology and healthcare founders and executives primarily in
major innovation hubs across the US, the UK, China and, for the first time, Canada.
In their responses this year, many startups tell us they expect business conditions
to improve in 2019, and they are making plans to hire employees and raise capital.
I love the fact that entrepreneurs are optimistic thinkers — after all, where would
we be if they didn’t have a positive outlook? At the same time, they are realistic
about the challenges they may face, whether hiring top talent, planning exits
during volatile markets or navigating geopolitical uncertainty (read: US-China
trade tensions and Brexit).
Looking at the first report from 10 years ago, I noted that hiring top talent was
a concern then — even with high unemployment rates coming out of the Great
Recession. Today, we hear how hiring challenges affect businesses in every
major innovation hub, whether due to unprepared workforces, immigration
policies or competition with tech giants. Entrepreneurs seldom speak with one
voice, but this report underscores the unified need to find solutions — or risk a
slowdown in innovation.
A small but interesting measure highlights the speed of innovation: The report of
10 years ago did not mention, for example, AI, autonomous cars or blockchain —
now pioneering technologies. This year, we asked respondents to predict what the
most promising technologies will be a decade from now. Check out the reports
to see what each country chose.
One more shift: Today, the innovation economy, with its size and complexity,
is a key barometer of the overall economy in many places and is subject to
macroeconomic tailwinds and headwinds. Whether 2019 will be a turning point
for global economies is hard to know. But we do know that innovators are adept
at uncovering opportunities and overcoming challenges. That is one constant
I don’t expect will change.
We hope you find useful takeaways in this report to help your company succeed.
Thank you for your interest. Let us know what you think.
Greg Becker
CEO, Silicon Valley Bank
UK STARTUP OUTLOOK 2019 2

3. ABOUT THE STARTUP OUTLOOK SURVEY
About the Startup Outlook Survey
Our annual survey of startup executives offers insights into what is on the minds of technology and healthcare leaders. For the 2019
report, we received responses from startup executives in innovation hubs primarily in the US, the UK, Canada and China.
Total
respondents
Primary place of business Ownership Founder
gender
Revenue stage
(USD)
Companies with at least
one founder born outside
their primary country
Industry sector Size Company age Profitable
1,377
95%
Private
59%
US
18%
Pre-revenue
28%
At least
one female
founder
57%
0–25
employees
52%
Yes
5%
Public
8%
UK
67%
< $25 million
in revenue
72%
Male-only
founder(s)
8%
Other
50%
US
69%
UK
49%
Canada
8%
Canada
25%
26–100
employees
62%
< 5 years
old
38%
> 5 years
old
48%
No
17%
China
15%
≥ $25 million
in revenue
18%
> 100
employees
66%
Technology
(net)
16%
Healthcare
(net)
18%
Other
UK STARTUP OUTLOOK 2019 3

4. UK startups
are realistic
despite
uncertainty
While generally optimistic before
the 2016 Brexit vote, fewer
entrepreneurs expect business
conditions to improve than in
previous years. The percentage
saying conditions will grow
worse stands at 22 percent, while
41 percent say they will improve.
Describe your outlook on business conditions for your
company this year compared with 2018.
BUSINESS CONDITIONS
Will be better Will stay the same Will be worse
2018
2016
2019
2017*
49%
48%
58%
42%
36%
41%
9%
16%
1%
41% 37% 22%
*First survey results after the June 2016 Brexit vote
UK STARTUP OUTLOOK 2019 4

5. Startups
predict Brexit
impact would
be negative
We asked UK entrepreneurs to
gauge the general impact of a
post-Brexit era on the innovation
economy, not tied to any specific
exit plan. In no uncertain terms,
they say it would be negative.
Post Brexit, the impact on the UK innovation
economy will be:
PUBLIC POLICY
“Not only has Brexit delayed investment decisions but it has also
wasted a huge amount of time and effort on plan Bs.”
CFO, software company
75%
Negative
14%
No impact
11%
Positive
UK STARTUP OUTLOOK 2019 5

6. More UK
startups plan
a European
outpost
With access to European markets
a concern, 28 percent of startups
say they plan to open a mainland
European outpost. Still, the UK
appears set to remain a vibrant
centre of global innovation:
Eight in 10 startups say they
have no thought of moving their
headquarters outside the UK.
As a result of the 2016 Brexit vote, I am:
PUBLIC POLICY
“Recruiting has gone from painful to almost impossible,
and we are opening offices in the EU.”
CEO, semiconductor company
Remaining in
the UK and
not opening
a European
outpost
Remaining in
the UK
but opening
a European
outpost
Thinking about
moving my HQ
to Europe
Moving my
HQ elsewhere
(outside the
UK or Europe)
Definitely
moving my HQ
to Europe
2018 2019
10%
14%
5%2%2%
6%
28%25%
55%53%
UK STARTUP OUTLOOK 2019 6

7. PUBLIC POLICY
Access to talent
remains the
top public
policy issue
The unpredictable outcome of Brexit
is prompting concerns over hiring,
should immigration rules tighten
and international trade grow more
complicated. Amid new EU privacy
standards — notably the General
Data Protection Regulation (GDPR)
that took effect in May 2018 —
UK startups also cite consumer
privacy as an important public
policy concern.
What are the most important public policy issues
affecting companies like yours?
Note: Respondents could choose up to three responses.
2017 2018 2019
Access to talent International trade Consumer privacy
82%
46%
“Protectionist policies are unhelpful for tech companies that don’t
see international borders the way traditional companies may have.
Simplification of tax regimes for cross-border trade would be beneficial.”
Treasurer, software company
31%
81%
45% 42%
76%
30% 26%
UK STARTUP OUTLOOK 2019 7

8. UK startups
are hiring
Challenges finding talent may be
increasing, but hiring forecasts
are strong. Eight in 10 UK startups
plan to expand their workforces
in 2019, down slightly since the
2016 Brexit vote. Startups are most
in need of filling sales, product
development/RD and technical
positions. These hiring trends are
similar to those in the US.
What are your projections for hiring new
employees in 2019?
HIRING AND TALENT
Increase workforce Stay the same Reduce workforce
“We need to ensure
that businesses can
employ the right people,
especially as we expand
into foreign markets.”
Founder, software company
2017 2018 2019
1%
89%
1%
83%
1%
81%
10% 16% 18%
Percentage of respondents who
say finding talent is extremely
challenging:
26%
25%
33%
2017
2018
2019
UK STARTUP OUTLOOK 2019 8

9. Women are
moving into
tech leadership
roles
As attention on gender parity in
the innovation ecosystem grows,
UK startups are reporting progress.
The percentage of startups with at
least one woman on the board of
directors is now nearly 50 percent.
And for the second year in a row,
nearly 60 percent of startups
have at least one woman in an
executive position.
SVB will publish an in-depth
report on Women in Technology
Leadership in H1 2019.
Percentage of startups with at least one woman
in a leadership position:
HIRING AND TALENT
2017 2018 2019
Women on board of directors Women in executive positions
27%
34%
47%
2017 2018 2019
42%
59% 57%
UK STARTUP OUTLOOK 2019 9

10. Startups
see healthy
fundraising
at home,
weaker abroad
Three in four UK startups
successfully raised capital
last year, and a quarter say
fundraising is not challenging.
This underscores the healthy
amount of domestic capital
available for innovation
companies. But the outlook for
raising international capital is
dimming: 44 percent believe
that access to funding from
international sources will decline
compared with 30 percent a
year ago.
What is your view of the current fundraising environment?
FUNDING
Note: Asked of private companies that successfully raised capital.
The ability to
raise capital
internationally
in 2019 will:
44%
Worsen
40%
Stay the
same
16%
Improve
2019
67%
Somewhat
challenging
25%
Not challenging
8%
Extremely
challenging
UK STARTUP OUTLOOK 2019 10

11. UK startups
rely on
venture capital
What do you expect to be your company’s
next source of funding?
FUNDING
Note: Asked of private companies that successfully raised capital. Other sources of funding include bank debt, IPOs, ICOs, mergers,
government grants and crowd funding and represented 9% in 2017, 12% in 2018 and 6% in 2019.
Venture
capital
Angel/
micro VC/
individual
investor
Organic
growth
Private
equity
Corporate
investor
56%
20%
8%
5%
2%
47%
23%
4% 3%
10%
50%
16%
13%
10%
5%
2017 2018 2019
By a large margin, startups
expect their next source of
funding to come from venture
capital. There is an uptick in
the percentage of startups that
say they plan to rely on organic
growth for funding needs, so
they don’t plan to raise capital.
UK STARTUP OUTLOOK 2019 11

12. Acquisition is
the most likely
exit strategy
While acquisition remains the most
likely exit path, a growing number
of UK startups say they expect to
stay private. Eight in 10 startups
think MA activity will grow or
remain about the same in 2019.
What is the realistic long-term goal for your company?
FUNDING
Acquisition IPO Stay private Don’t know
43%
21%
17%
13%
49%
22% 24%
11%
2018 2019
How do you think the MA market will change in 2019?
More acquisitions
No change
Fewer acquisitions
2018
43%
45%
46%
36%
11%
19%
2019
UK STARTUP OUTLOOK 2019 12

13. AI is the most
promising sector
now — and
in the future
AI, digital health and big data are
the top areas that UK entrepreneurs
say have the most promise now.
Looking ahead 10 years, they
expect autonomous transportation
and cleantech/energy innovation
to replace big data and fintech in
the top five.
FUNDING
Which areas will be the most promising in the
innovation economy?
2019
Note: Respondents could choose up to three responses.
AI
Digitalhealth
Big
data
Life
science
Fintech
AI
Autonom
ous
transportation
Life
science
Digitalhealth
Cleantech/
energy
innovation
0%20%40%60%
In a decade
80%
UK STARTUP OUTLOOK 2019 13

14. About Silicon Valley Bank
For more than 35 years, Silicon Valley Bank (SVB) has helped
innovative businesses, enterprises and their investors move
bold ideas forward, fast. SVB provides a range of targeted
financial services and expertise through its office in the UK.
With commercial and international banking services, SVB
helps address the unique needs of innovators. The UK’s
leading technology and life science businesses, in all stages
of development, look to SVB’s niche expertise, years of
experience and unparalleled network as they grow at home
and tackle new markets abroad.
Learn more at svb.com/uk
Silicon Valley Bank is registered in England and Wales at Alphabeta, 14-18 Finsbury Square, London EC2A 1BR, UK, under No. FC029579. Silicon Valley Bank is authorised and regulated by the California Department of Business
Oversight and the United States Federal Reserve Bank; authorised by the Prudential Regulation Authority with number 577295; and subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential
Regulation Authority. Details about the extent of our regulation by the Prudential Regulation Authority are available from us on request.