Tech talent and funding gaps quantified: Austin, TX

Overcoming tech talent and later stage funding gaps in Austin, TX, one of the world’s fastest growing tech markets

How does one of the world’s fastest growing technology cities, with a 3.2% unemployment rate, help employers close tech talent and funding gaps?  

In this RCRatx Studio Lounge Speakers Series program, RCR Wireless News will explore Austin’s unique place in the global technology community along with how the Austin Technology Council is helping technology companies overcome talent scarcity and funding challenges.

• Host: Jeff Mucci, CEO and Editorial Director – RCR Wireless News 
• Guest: Julie Huls, President and CEO – Austin Technology Council
• Guest: Lynn Atchison, CFO – Homeaway, Austin Technology Council Vice Chairman

Discussion areas:

• Two recently release reports:
  • The Tech Talent Study; which assesses the workforce pipeline in the Austin Tech Sector
  • The Capital Landscape Analysis; which takes a look at Austin’s investment infrastructure in comparison to other top tech markets including Silicon Valley and Raleigh Durham.
• What is driving technology employment growth in Austin? 
• What are challenges?
  • Attracting talent
  • Later stage financing
• Role of Austin Technology Council 

Capital Landscape Analysis

The report, prepared by Dr. David Altounian, Assistant Professor of Entrepreneurship and founder/former chairman of Motion Computing, shows a strong relationship between the number of funding sources and the total amount of investment and average deal size within a city, as demonstrated through these findings:

• While Austin is ranked #1 for startup activity (a term the Kauffman Foundation defines as the combination of the rate of new entrepreneurs, opportunity share of new entrepreneurs, and startup density), it ranks twelfth for venture capital funding according to the NVCA data.
• Austin has 144 funding sources as compared to the top four metro areas: Silicon Valley (785), New York (739), New England (475), and Chicago/Midwest (371).
• While most metro areas average $10M – $11M per deal, Austin has a $5.4M mean average deal size.
• Total venture capital investment in Austin is just $620M as compared to roughly $4B in both the New England and New York regions. Seattle and Southern California also receive more funding at $1.2B and $2.6B, respectively (National Venture Capital Association 2014 report).

Tech Talent Survey

Preliminary findings of the Tech Talent Survey indicate:

• Austin needs to fill 2,500 to 3,500 core tech talent jobs on average per year through 2024. Currently, employers indicate that they are filling the majority of openings with people already living in Austin, and not all tech jobs require a bachelor or advanced degree. Nearly one-half of survey respondents require a minimum of five years of work experience in order for job candidates to be considered qualified, presenting a barrier to getting entry-level core talent into the supply, especially local graduates.
• Results are unclear on the magnitude of the perceived talent shortage industry-wide. Some companies–particularly smaller, fast-growing firms–are finding it difficult to hire for core tech talent positions. However, survey results suggest that large companies may be experiencing the perceived talent shortage differently, or not at all.
• While Austin continues to grow as a leading tech market, wages for core tech talent jobs are lower than most leading tech regions nationally. Some of this can be explained by cost of living differences, but some of it cannot, such as comparisons with Raleigh-Durham, Dallas, markets of similar size to Austin, and even national median wages.
• Results indicate a mismatch in the types of technology certifications offered in Austin area school districts and employer needs. These certifications may be useful as a “gateway” for students to discover interests and talent in tech, but, on their own, are not useful credentials that can be translated into the labor market.
• Supply does not meet demand. Even if all 1,500 graduates in core tech programs from postsecondary institutions in Austin were considered qualified in 2013, –88 percent of employers do not consider recent graduates as qualified candidates–, twice as many are still needed to keep up with current demand.