Mid Atlantic entrepreneurs say that 2014 will be better for their businesses than 2013 based on results from Silicon Valley Bank’s 2014 Innovation Economy Outlook Survey. Our region, which we describe as Pennsylvania, Delaware, New Jersey and Maryland, has a more optimistic outlook on this year compared to peers around the country.
Entrepreneurs here are also 10 percent less likely to be using venture capital as their next funding source, instead bootstrapping or self-financing, than the national average, which includes the finance hubs of the Bay Area and Manhattan.
The survey, compiled with responses from 64 entrepreneurs and executives in the Mid-Atlantic and over 1,200 across the country, demonstrates the scrappy yet positive attitude of our region.
Here are three key highlights from the survey:
- 76 percent of companies nationally plan to hire in 2014, which exceeded the regional total.
- 82 percent of nationally-surveyed entrepreneurs think 2014 will be better than 2013, while 84 percent in our region do.
- 32 percent of Mid-Atlantic companies plan to use venture capital as their next funding source, while the national average was 43 percent.
Our region, as an aggregate, performed below average when it came to hitting revenue targets for 2013. This, in turn, may be why innovators believe 2014 is primed for a revenue comeback. Given this, fewer companies plan to hire in our region compared to the rest of the country.
When we meet with prospects and clients, we see people wearing many different hats, and our survey results confirm this region-wide trend. This approach can lead to longer hours but higher valuations in the long run. The measured growth approach preventing companies from getting out “over their skis” in expenses is a hallmark of SVB Philly’s portfolio.
Not surprisingly, the three pain points for innovation companies in 2014 are expected to be (a) access to equity, (b) scaling operations and (c) building their team, a recruiting challenge felt nationally.
Fortunately, with the talent from our local colleges and universities and the reduced cost of living compared to other tech-hubs, our region is below the national average when it comes to hiring being a challenge. This result echoes the Philly entrepreneurs sentiment shown Technically Philly’s recent local startup survey, in which fewer than half of respondents cited talent acquisition as the biggest burden.
On the equity side, given my previous point, the mid-Atlantic region does not rely on venture capital funding as much as traditional tech hubs — Philadelphia rarely breaks the top 10 of most active VC markets and the mid-Atlantic is a smaller investment community than the Bay Area, New York and Boston.
Given the rise of angels and corporate investments in the region, we see this as a positive for entrepreneurs, as they now have the power in choosing the right partner and financing path for their specific situation.
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