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Bubbles and burning

Access to capital at an early stage may be at an all-time high, but access to the right talent and services in the early days, while companies scale, could make or break you. So, is there still a ‘capital crunch’ or are startups failing in a ‘talent famine’?

The rate of company formation is at unprecedented levels. Q3 SVB data says new companies are up around 20% on the same quarter in 2013. Seed funding is also way up. Even the pace of funding rounds is higher in 2014.

Right now, in VC land, sectors receiving the majority funding are Mobile, Payments, Security and Big Data. But, the whole investment landscape has shifted: first off, there’s the rise of the Micro VC – with seed funds now accounting for 67% of all VC funds. Then there’s Corporate VC, with more than 1100 CVCs globally - double the number from 2009 – who are now participating in about 30% of all VC deals and investing much earlier. 2014 data so far says corporate VCs are investing equally in A, B and C rounds, and  gone are the days where a CVC only invests before a company goes IPO.

Next, there’s the growth of crowdfunding, which has now become a multi-billion dollar industry. Crowdfunding platforms like Kickstarter, Indiegogo and Crowdfunder are collectively expected to raise $5bn dollars in 2014, and it seems there’s nothing ‘the crowd’ can’t fund”.

Finally, the balance of power has shifted to the founders, who are getting savvier about terms, and finding myriad avenues open for seed funding to get off the runway. Founders are also bootstrapping for much longer, resisting the urge to dilute ownership for short-term cash injections, taking advantage of the numerous programs and platforms offering free or next-to-free services. The cost of starting has declined radically in a decade. It’s a good time to start.

All good news and reason for optimism as a company just starting out. So what else is there?

Building, running and scaling a startup is still no walk in the park. Access to growth capital and talent continue to be major barriers to growth as seen in Silicon Valley Bank’s recent Innovation Economy Outlook report. According to the report, 77% startups plan to hire in 2014, but 91% said it is extremely or somewhat challenging to attract the right talent and experienced STEM graduates.

At SVB, we know startups. We bank more than 50% of the best VC-backed companies in the US, and the majority of the VC firms that invest in them. Being at the heart of innovation, we also see unprecedented levels of disruption and competition. That’s why placing the right bets, adopting the right services and resources early on, can make a big difference. It is incumbent on larger institutions like SVB and to add value for smaller companies starting out, helping founders gain access to capital, talent and customers.

And with services like and other best-of-breed solutions, we want to help our clients can grow fast and smart. It’s a perfect storm and startups need to make a choice now - disrupt or be disrupted.

New Offer for Startups 

We are pleased to announce that SVB is now part of the Service Accelerator Program. Now SVB startups have access to FREE licenses to help them deliver amazing customer service from day one. To learn more and register for the Desk Service Accelerator SVB Startup program visit

Headed to Dreamforce next week? If you’re a startup interested in learning more about SVB's banking services for startups, join us at Galvanize (543 Howard St. San Francisco) for a happy hour on Tuesday, Oct 14 from 5-7pm to meet representatives from SVB, Desk, and Please go to this eventbrite page and use password: svb.

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