The State of Startups
The startup community changes often, as new ways of doing business become popular and new technologies are introduced. Entrepreneurs are adaptable, but they still have concerns when it comes to launching a new company.
First Round released a “State of Startups” report giving an inside view of founders and entrepreneurs across the technology community. With responses from over 700 founders, First Round captured the state of the startup ecosystem, delving into topics such as fundraising, gender diversity, and acquisitions. The report gives insight into the biggest concerns startups have, and what entrepreneurs need to know about doing business in 2017.
There are numerous takeaways from the report, so we’ve highlighted four that startups large and small need to know.
1. As the Startup Bubble Deflates, the Pressure is On to Launch
Fewer founders report that the startup ecosystem is in a bubble. Furthermore, 9 out of 10 founders said it’s a good time to start a company. Entrepreneurs with new, innovative ideas should consider launching now since the market seems to be on a downswing.
With fewer startups launching and the bubble deflating, the competition could potentially be less. Only one in five founders believe they have a unicorn on their hands, which means there is definitely space for creative and original ideas.
2. Startups Must Cater to Investors
43% of founders think the IPO market will improve. And a whopping 72% believe more mergers and acquisitions will come this year. In terms of investment, founders believe that investors have the upper hand more so than in the past.
Startups must continue to cater to investors and create strong pitch decks and portfolios. Startups that try to use vanity metrics to woo VCs will be left unfunded, while companies that show valuable potential and disrupting ideas have the potential to raise more capital.
3. Gender Diversity is a Problem, but No One Agrees on the Cause Yet
When searching for the cause of the gender diversity problem in technology, men and women disagree. Men are more likely to blame the lack of recruitment of women into the technology industry, while women note the unconscious bias and lack of role models in the space. Furthermore, 61% of founders say their board is made up of all males.
Tackling this issue, the average respondent believes the technology industry is 14 years away from mirroring the gender and ethnic makeup of the United States. Whatever the cause, startups must be aware of this issue and take action to address it.
4. Finding Top Talent is Still the Biggest Concern
For the past few years, founders named finding good people as the top concern. Of those surveyed, 31% said they plan to hire 1-5 employees in the next 12 months. The hardest position to fill is “engineering leader,” said 30% of founders. More than a third (37%) are behind in their hiring plan, most likely because startups struggle to find talent that fits both the company’s needs and organizational culture.
Founders struggle to find candidates that fit in with startup culture and thrive in the fast-paced environment. Particularly for startups that scale quickly, being able to find the perfect candidate fast is nearly impossible. Sometimes startups only need an extra hand for a few months, not a full-time employee, which can be difficult to find in today’s job market. Outsourcing or staff augmentation is a good option that allows startups to scale up or down as needed but remain quick to market with new concepts and ideas. It also gives companies struggling to find good people access to an already approved and screened group of top talent.
View more trends and insights from the State of Startup Report here: