RESEARCH TRIANGLE PARK – Startup founders are yet again bullish on the IPO market, the State of Startups 2018 survey from First Round discovered.
“With unicorns like Uber, Slack and Palantir expected to go public soon,” the company wrote in its findings, 78 percent of respondents predicted that the pace of initial public offerings will occur at the same rate or at a greater rate in 2019 than in 2018. Respondents also overwhelmingly believe that merger and acquisitions activity will stay the same or increase–93 percent of the 529 company founders reported this belief.
First Round is a seed-stage venture firm focused on building a “vibrant community of technology entrepreneurs and companies.”
Despite continued concerns about hiring, particularly in sales and engineering, and securing additional funding, the surveyed founders are optimistic with 94.5 percent of founders sharing their opinion that 2019 will be a good time to start a company. Only 6.5 percent of the founders surveyed are headquartered in the southeastern United States, while 37.5 percent are based in Silicon Valley and nearly 20 percent are headquartered in New York City.
The 57-question survey asked founders to share their opinions on diversity, fundraising, operations, and a bevy of other topics. It is the fourth consecutive year the survey has been conducted.
Founders are split on whether or not we’re in the midst of a growing technology company bubble. Nearly 39 percent believe there is definitely not a tech bubble, nearly 29 percent believe that a bubble does exist, but it won’t pop soon, and 32 percent believe the tech bubble exists and expects it to pop soon.
While nearly 57 percent of founders believe that the U.S. will continue to be the center of the technology world a decade from now, 38 percent believe that the power will shift to China. And despite the hype of blockchain technology, founders don’t anticipate a wide adoption in their industry over the next five years, with nearly 17 percent claiming that no one in their industry will deploy blockchain and 57 percent predicting that the technology will still be experimental in their industry and lack widespread adoption.
The University of Oxford estimated that 47 percent of all current jobs are at risk of automation due to advances in artificial intelligence and machine learning technology within the next two decades. Forty percent of founders agreed, and another 22 percent believe that the researcher’s estimate is low.
Entrepreneurs believe that their share of power is decreasing. While 59 percent believed that the power in the fundraising environment was largely in the hands of entrepreneurs in 2018, only 53 percent believe that entrepreneurs will generally have more power in 2019. Firms typically pitch between 11 and 20 investment groups prior to securing a round of financing, with nearly 21 percent of founders reporting their pitch meetings within this range. More than 40 percent of funding rounds took four months of longer to secure, and 44 percent of founders believe raising their next round will be harder than raising their last round.
Nearly 65 percent of founders believe that their company will be profitable within the next three years, and 13 percent reported that they’re already profitable. Thirty-nine percent know they’re not planning to build a billion-dollar company, but 22.6 percent are certain that they’re on their way to unicorn status and another 22 percent believe there’s a possibility of receiving a billion-dollar valuation in the future.