Team Stabilitas doubling their team size. Photo by Kara Gomez.
Team Stabilitas pose next to a Techstars sign as they celebrate doubling their team size. Credit: Kara Gomez

On Oct. 21, Techstars announced the closing of its San Antonio cloud program. Techstars opened its accelerator in San Antonio with its first 11 startups January 2012.

The program in San Antonio focused on tech startups whose products or services were cloud based. The San Antonio cloud startup accelerator had graduated four classes, taking a year-long break in 2014 when managing director Jason Seats moved to Austin to head up Techstars Austin.

Since resuming operations in 2015 under director Blake Yeager, the program recently graduated 11 startups. However, according to Yeager, who was a former cloud program mentor and previously worked at Rackspace, the program has run its course and Techstars has closed in San Antonio.

The news did not come as a surprise to anyone working in the local tech ecosystem.

Managing Director of Techstars Cloud Blake Yeager gives remarks at the Tech Fuel press conference.
Managing Director of Techstars Cloud Blake Yeager gives remarks at the Tech Fuel press conference. Credit: Scott Ball / San Antonio Report

“The investor community in San Antonio had been in ongoing conversation with Techstars for a couple of months about the inevitability of closing down the San Antonio cloud program,” Yeager said.

In June, the City of San Antonio had launched a retention program to help convince Techstar companies to stay in San Antonio and grow their companies in the city by hiring local talent. Techstars partnered with Tech Bloc, which managed the Techstars Talent Retention Pilot Program.

However, that program was not as compelling in retaining companies as first thought.

“In June our intentions were to continue the program as it existed,” Yeager said. “By July, that’s when we began to think about whether the vertical cloud continued to make sense. That’s when the ongoing discussion (about closing the San Antonio Techstars program) started.

“Everybody has different measures of success,” Yeager continued. “The ability for the program to retain companies in the San Antonio ecosystem was an important metric for many. While many of the program graduates have done well, many decided to move elsewhere.”

The Tech Ecosystem is Ever Changing

Rackspace was responsible for first bringing Techstars to San Antonio. The need for the cloud program accelerator was pressing four years ago.

“When Techstars started in 2012, there was no dedicated early stage investment fund,” Yeager recalled. “Now we have the Geekdom investment fund, as well as other things like Lew Moorman‘s Scaleworks.”

When CEO of Jungle Disk Bret Piatt was at Rackspace, he remembered working with Yeager and others to get a Techstars cloud program presence in San Antonio.

The reason for closing down the cloud tech startup accelerator reflects just how much tech startups in particular, and technology in general, has changed over the past four years. Today, tech startups, as well as many companies overall conduct their work using cloud computing.

“Building a tech startup on the cloud is no longer novel, so the cloud program is no longer unique,” Piatt explained. “It doesn’t make any sense to continue this in San Antonio.”

Moorman agrees.

“Techstars has had a good run,” Moorman told the Rivard Report. “It helped jump-start the ecosystem, but there are others ways to accelerate the scene.

“We agreed that it was time for Techstars to take a break, and who knows, it could come back to San Antonio in another form that’s unique. It’s served its purpose in jump starting the tech ecosystem and we’re super thankful for what they did.”

Techstars worked with the city and tech community to inform everyone of the decision to close the San Antonio cloud program.

“Not that many Techstar companies stayed in San Antonio,” Moorman said. “I think we can do some programmatic things to help convince tech companies to stay and grow here. The bottom line is that Techstars opened the doors for other creative ways to support the local ecosystem.”

One of those creative ways is the newly created San Antonio Angel Network.

In a down economy growing the tech ecosystem can be even more challenging. There have been fewer IPOs in the past several years, meaning fewer exits, resulting in less capital redistributed into the venture pool. The Angel Network is one creative way to help address the availability of venture capital for emerging tech startups in San Antonio.

“With the Angel Network just getting off the ground, the capital may soon be enough to continue the tech startup scene,” Piatt told the Rivard Report. The Angel network is already vetting some companies, Piatt said, and has started to line up some for consideration in November.

“I think (Techstars closing is) a loss but I know there will be other things coming online,” Moorman said. “We really needed them four years ago to kick-start things. But we live in a different world now, with everyone working in the cloud.”

For many, the Techstars closing reflects the natural evolution in the local tech scene.

“It’s partly the natural evolution of the ecosystem and partly the progression of the cloud as a vertical,” Yeager said. “If we were to do another program in San Antonio, I would think it would be a more narrowly focused one.”

There are no definitive plans at the moment for a new San Antonio Techstars program. Yeager has taken on a new role as vice president of engineering with Techstars in Boudler, Colo.

“I intend to remain engaged (in the San Antonio tech scene) to see if that is merited in the future,” Yeager said. “We still have several alumni in San Antonio and plan to continue to be active here with Startup Week and Startup Weekend, so we’ll continue to be in active in the San Antonio community.”

Moorman hinted at several new developments in the works that will be announced soon, developments aimed at growing the tech ecosystem in San Antonio.

“We’ll see what happens to fill that void,” Moorman said.

Iris Gonzalez

Iris Gonzalez writes about technology, life science, and veteran affairs. She won the Texas Veterans Commission Media Excellence Awards for her 2016 Veterans Day story "Life as a Veteran: What Veterans...