Edward A. Ornelas for the Rivard Report
San Antonio's tech scene has been on an incline since the revitalization of a long-dormant downtown, but as East Houston Street co-working space Geekdom – the spiritual birthplace of the emerging tech district – celebrated its seventh birthday Friday, the city risks being left in the lurch by other second-tier tech cities whose growth appears to be outpacing the Alamo City's.
In recent years, the city has slipped in rank for tech talent, from 40th in 2015 to 46th in 2018, according to a national report, with cities such as Cleveland and Nashville overtaking San Antonio.
But the city's downtown techies expect that to change after the University of Texas at San Antonio announced it was joining forces with the burgeoning urban tech corridor – bringing thousands of additional students and adding considerably to its downtown footprint, with a cybersecurity-focused National Security Collaboration Center and School of Data Science, among other facilities.
That excitement hit a fever pitch this week as the local tech sector held its annual conference, bringing together a who's who of regional leaders in the tech sector but also elected officials and other industry minds.
"Startup Week has a certain energy on this street [Houston Street]," said Lorenzo Gomez, Geekdom and 80/20 Foundation chairman. "You can feel that things are happening. When you add 15,000 students downtown you're going to feel that energy. Only it's going to be every day."
The quality-of-life offerings that tech professionals are often drawn to – breweries, coffeeshops, boutique hospitality – are starting to arrive in San Antonio. Once the bogeyman of local tech executives, who often compete with Austin's keep-it-weird ethos and resplendent nightlife, San Antonio's livability appears to be on the rise. It's the first time in former Rackspace President Lew Moorman's 20 years in this city that tech workers and entrepreneurs are open to leaving Austin, he said. Carving out one's own space in the local tech sector is the promise the city holds, he said.
"If you want to make a difference, this is a good place to do it," Moorman said. "You can have a big impact here. So don’t be shy and offer your talents."
One potential difference-maker is Ryan Cleary, who moved to San Antonio from Cleveland in 2017 as a fellow for Venture for America, which provides aspiring entrepreneurs the opportunity to work in a startup in emerging U.S. cities.
Although it can be insular at times and the tech scene needs to work on "democratizing" entrepreneurship for people of all backgrounds, he said, San Antonio's tech scene is a "quiet gem" with a collaborative and welcoming atmosphere.
"Everyone is willing to talk to each other about what they're working on and give each other support and advice," he said.
That openness helped him find co-founders for his young startup FloatMe, a tech-powered platform that provides employers the ability to offer workers early access to their paychecks.
San Antonio's incremental growth reminds him of the turnaround Cleveland has experienced since establishing its Health-Tech Corridor, which has become a hub for biomedical and high-tech companies.
"[The city is] laying the framework that five to 10 years from now is going to allow San Antonio to really leap forward," he said.
Although almost everyone agrees San Antonio has lots of work to do to catch up to other thriving tech economies, the mood at San Antonio Startup Week was optimistic. The architects of San Antonio's tech scene and the professionals employed by the growing spate of startups emerging in the Houston Street corridor point to recent developments as the reason for their sunny disposition.
USAA, one of the city's top employers of tech talent, has begun to relocate its innovation team downtown in a gradual migration of its technical workforce to One Riverwalk Place, closer to the hub of activity in the emerging tech district.
UTSA will expand its downtown campus to include 8 acres in total with a focus on cybersecurity research as well as information technology education. The university will become one of the first higher education institutions with a School of Data Science, a growing field that includes artificial intelligence and machine learning, which experts say will drive the next industrial revolution.
Startup Week drew the most registrants – more than 1,000 – in the three years since it was founded. A few participants flew in from other cities, and a busload of Austinites motored down Interstate 35 from the startup incubator the Capital Factory.
But there have also been some hiccups along the way.
Many in the local tech sector took the news of H-E-B's decision to build a new e-commerce innovation center in East Austin as an indictment on San Antonio's software developer talent pool and perhaps its limited quality-of-life offerings compared to the state capital.
In April, Tech Bloc, an advocacy group for San Antonio's tech industry, hired a chief talent recruitment officer to serve as a single point-of-contact for drawing and retaining techies to the city, but the organization is now searching for someone new to take on the role. The hiring process for that position, for the which the City of San Antonio and Bexar County have each earmarked $150,000, had originally begun last summer.
Venture capital investment is also trending low this year – so low, in fact, that VC deals in San Antonio aren't expected to reach more than $18 million this year. Every year since 2013, that number has been above $30 million with a whopping $96 million in deals in 2014, according to the PricewaterhouseCoopers MoneyTree Report.
By comparison, the Austin, Dallas, and Houston metropolitan areas have averaged $960 million, $471 million, and $393 million from 2013 to 2017, respectively. The San Antonio metro area averaged $58 million over that same period, according to the report.
Gomez, however, does not believe access to capital is a problem.
"Graham [Weston, Rackspace co-founder and entrepreneur] once said, 'Money goes where the deals are good,'" he said. "Money will travel where the companies are exciting."
San Antonio's knowledge jobs center on the city's cybersecurity industry with the presence of the military, specifically the U.S. Cyber Command at the 24th Air Force, and national security contractors, said Jenna Saucedo-Herrera, president and CEO of the San Antonio Economic Development Foundation.
"Cyber is the at the top of our list right now," Saucedo-Herrera said. "When we look at our community and where we can differentiate ourselves, cyber is the place to play right now."
But ecosystem builders like Gomez are concerned that San Antonio's sprawl has had negative consequences for creating a thriving tech sector – whether it's inadequate mass transit, lack of quality-of-life offerings, or not enough collaboration and information exchange.
With UTSA's National Security Collaboration Center, its federal and private sector partners, and the School of Data Science set to be located downtown with access to co-working space Geekdom, software development trade school Codeup, and the nascent tech district, the stage is being set for San Antonio's ecosystem to continue its surge, Saucedo-Herrera said.
"The more and more we do to build on that ecosystem to build on that momentum that exists, the more success we'll have in that space in my opinion," she said.