The City of San Antonio is joining forces with the urban advocacy group Tech Bloc, and Techstars Cloud, the San Antonio chapter of the global startup accelerator, to create the Techstars Talent Retention Pilot Program, a four-year, $800,000 retention fund that aims to keep tech startups from leaving the city after they evolve into small businesses. The fund is part of the City’s larger, emerging economic development strategy to focus more resources on supporting entrepreneurs and locally grown businesses.
Techstars Cloud is part of the 22-city global Techstars network that attracts and supports some of the world’s most innovative programmers and entrepreneurs. Since its inception four years ago, Techstars Cloud has enrolled 44 different startups in its incubator program here. Those 44 companies have been fueled by $177 million in venture capital investments, yet all but eight left for more tech-friendly cities after completing the program. Some departing entrepreneurs said the city’s tech sector was too underdeveloped, while others found other cities more attractive places to live, work and play. Of the eight companies that elected to stay in San Antonio, five were founded here, so only three companies brought to San Antonio by admission into the highly competitive Techstars Cloud program chose to stay afterwards.
There are 11 new companies in the Cloud 2016 program, the fourth class, that were announced in November. The City’s new talent retention program, if approved by City Council next Thursday, would provide $200,000 in funding each year, allowing the City, in collaboration with Tech Bloc and Techstars Cloud, to select as many as four companies our of each graduating class and offer their owners up to $50,000 over a three-year period to defray basic operating costs, such as leasing office space and paying for moving expenses. The City’s goal is to retain 16 new companies in San Antonio by 2020, which would require 100% success with its 16 grants of $50,000 over the four-year period.
“This program supports talented entrepreneurs who are building high-growth companies in San Antonio, demonstrating our commitment to becoming a globally competitive city where everyone has the opportunity to succeed,” said Mayor Ivy Taylor. “Partnering with Tech Bloc on this pilot program allows us to continuously improve our approach to secure promising tech entrepreneurs who are potentially building the next Rackspace or Facebook right here in San Antonio. In addition, we updated our incentive toolkit, expanding our commitment across other industries and providing more workforce development options so residents have better access to jobs created by these new companies.”
Tech Bloc would act as the program manager. Interestingly, the fast-growing tech and urban advocacy group will celebrate its first anniversary at the Pearl Stable Thursday evening, the same date of the City Council vote. Tech Bloc was born out of the collective frustration of its members with City policies that led to the departure of rideshare companies Uber and Lyft, and the advocacy group’s subsequent efforts were key to establishing new guidelines that led to the companies returning. More than 1,750 people have registered to attend the June 16 anniversary event, although the Pearl Stable holds a maximum of 500 people. Tech Bloc is planning for a significant outdoor audience as well, much of it drawn by the group’s promise of a major downtown announcement.
“Tech Bloc is excited to partner with the City on this important program to foster startup creation and retention in our developing tech ecosystem. It’s great to see our City leadership team be so invested in San Antonio’s startup community,” said Tech Bloc’s Chief Operating Officer Marina Gavito.
Tech Bloc Co-Founder Lorenzo Gomez added: “programs like this send a clear message to the founder community that San Antonio is an ideal place to start and grow their company, and we are proud to partner with the City on this great initiative.”
The money will come from the City’s Economic Incentive Development Fund, established in 2004, that has been used for job creation programs at Toyota, Medtronic and HOLT Cat, and more recently, has focused on helping grow emerging sectors, including the recent Cybersecurity Strategy Study, and launch new economic development strategies, most notably the 2016 SXSW Initiative. City Council will have to approve amending the existing EDIF rules before the retention fund program can be established.
“The proposed amendments to the EDIF Guidelines expand support for initiatives and projects that achieve the goals outlined in the community’s economic development strategic plan, Forefront SA and those outlined in the City’s SA Tomorrow Comprehensive Plan, with a particular focus on supporting growth in entrepreneurial development,” an internal staff memo to City Council states. “These amendments will help the City better promote entrepreneurial development, spur innovation, facilitate the commercialization of local technology and intellectual property, and that grow startup companies in the City’s Targeted Industries, cultural and creative industries, and support workforce development initiatives. City Council action is required to amend the EDIF Guidelines.”
“The City of San Antonio is working to put in place the tools needed to better support partnerships within our targeted industries,” said City Manager Sheryl Sculley. “Across the country, new, high-growth technology companies, such as those completing the Techstars program, are leading in the creation of quality, high-paying jobs. This type of industry-driven economic development policy is an important piece in how we implement the recommendations and goals of SA Tomorrow and Forefront SA.”
Both plans support the City’s strategy of raising average wage rates by focusing job growth in the City’s Targeted Industries.
“Across the United States, the highest performing large metro economies – as ranked by the Milken Institute – have a common ability to not only attract, but also retain tech entrepreneurs from all over the world that seek venture, angel and other forms of growth capital”, the same economic development memo notes. “This type of capital and investment is associated with the high -growth, high-wage, high-skill enterprises that account for a disproportionate amount of the job growth in these high-wage, high-skill enterprises that account for a disproportionate amount of the job growth in these high performing economies. The increased concentration of like-minded entrepreneurs and the technical and business talent that support them then creates a local culture that is complemented by an environment commonly described as the ecosystem.”
Founded in 2006 in Boulder, Colo., Techstars is a mentorship-driven technology startup accelerator that helps bring new technologies to market. Techstars operates 22 accelerator programs and is considered one of the best and most competitive startup accelerators in the world. Highly selective, Techstars accepts fewer than 1 percent of the thousands of applications it receives from entrepreneurs around the globe. The Techstars Cloud Program, established in 2012, operates out of Geekdom in downtown San Antonio.
“The Techstars program gives us the opportunity to attract world-class entrepreneurs to San Antonio and connect them to the local ecosystem,” said Techstars Cloud Managing Director Blake Yeager. “These investments illustrate the City’s commitment to helping retain such talented people and ideas in San Antonio, and to continuing to develop and grow the tech industry and ecosystem.”
Top image: Techstars Cloud Managing Director Blake Yeager leads a Key Performance Indicators Session, measuring the key metrics that move businesses forward, in April 2016. Photo by Kara Gomez.