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Silicon Valley Study Finds Entrepreneurs Remain Resilient and Optimistic on Outlook for High Tech
Expect New High Tech Cyclical Upswing to Emerge By End of 2004
SAN FRANCISCO, Calif. — July 21, 2003 — Market4Demand, Inc., a Silicon Valley technology marketing services firm, announced results from a survey it conducted with local high technology entrepreneurs to assess their perspectives on the technology outlook, funding, and the general business climate. Overall findings from the survey reflected a high level of optimism and resiliency with this group. 57% of the survey respondents stated that they would continue their startup endeavors even if there is no change in current market conditions "for as long as it takes." The majority of the respondents, 81%, stated that they will "keep going as is" even if the economy remains flat for the remainder of 2003.
Interestingly, more than two-thirds of the respondents believe there is likely to be a new period of expansion beginning in late 2004 or in early 2005. According to respondents' feedback, top areas of innovation anticipated to drive this new period of expansion include: nanotech, biotech, Internet/Web services, security, wireless, mobile technology, and consumer entertainment.
"The enduring resourcefulness and conviction that local entrepreneurs hold goes against popular belief that technology innovation is waning in Silicon Valley. On the contrary, the level of entrepreneurial optimism and confidence that this study reveals is in line with what makes Silicon Valley the bedrock of high tech," stated Sarah Autrand, founder and chief executive officer of Market4Demand.
Related to business operations, nearly 70% of respondents point to the diversity of available talent as the chief benefit of operating their business in the San Francisco Bay Area. When asked about the challenges that they face, more than 6 out of 10 respondents stated attracting key talent as the primary challenge due to the high cost of living and salary demands when compared to other regions. The depressed economy ranked as the second greatest challenge with respondents.
Employment Outlook
Respondents view their engineering and R&D or their management team as their areas of greatest strength, while a majority pointed to sales as their weakest link. The hiring outlook with this group appears to be favorable as 64% plan to hire 1-10 new employees over the course of this year, primarily in engineering and sales. On a bright note, 91% stated that they have no plans to do any layoffs during the year.
"What we've been seeing over the last two to three years at The Enterprise Network (TEN), are entrepreneurs with a great inner toughness and willingness to make the hard sacrifices, which can sustain them through today's type of deep market downturns," said Dr. William Musgrave, president and chief executive officer of TEN. "Many of these entrepreneurs are putting very little energy into pursuing investors, but are working hard to raise money the old-fashioned way -- getting it from customers by selling products and services."
Alternative Funding Ranks High
When questioned about the current funding climate, 63% were considering funding alternatives in addition to or instead of private equity placement. "Great new businesses will usually manage to get funding, although venture funding isn't always the answer," said Jonathan Abrams, founder and chief executive officer, of the rapidly-growing Friendster, an online community founded in 2002 that connects people through networks of friends for dating or making new acquaintances. "Now is actually a good time to start a new company. I'm still seeing entrepreneurial activity in Silicon Valley, but this time without all of the excesses of 1999."
Among those considering alternative funding, 54% were opting for small business loans or bootstrapping the company through friends, family and personal savings. During 2001-2003, 80% of the respondents refrained from pitching private equity investors due to the unfavorable climate. Only a small percentage (5%) of respondents were seeking series C or later stage funding.
About Market4Demand
Market4Demand, a technology marketing services firm located in San Francisco, delivers strategic and tactical marketing services that help increase shareholder and customer value. Market4Demand specializes in marketing planning and implementation, interim marketing management, and marketing communications. The company offers expertise in both enterprise and consumer technology solutions. In 2001, it launched Market4Demand's Marketing Educational Series for Entrepreneurs (MESE), a sequence of workshops developed to empower entrepreneurs with practical, value-based technology marketing best practices. For more information about Market4Demand's services and Market4Demand's Marketing Educational Series for Entrepreneurs (MESE) visit www.market4demand.com.
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