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Tech Startups’ Challenge: Finding Talent

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May 15, 2013

More tech startups than at any time in the last four years will be looking to hire this year, says Silicon Valley Bank, but they worry they won’t be able to find the talent they need.

Even as most leaders and founders of the firms surveyed by the bank for its annual Startup Outlook say conditions in the U.S. are better this year than last, the number of them who report hiring talent is their biggest challenge has grown. Nine out of 10 executives report finding and hiring the talent they need is their biggest challenge.

The annual survey, says 87% of the tech startups reported plans to add staff this year. That’s up four points from last year, and 14 points from the first survey conducted in 2010. The strongest market for startup hiring, according to the report, is Texas. The Boston area and metro New York are 3rd and 5th respectively.

Finding Talent Is Biggest Challenge

Silicon Valley Bank startup hiring challengeSoftware and hardware startups report having the hardest time finding the tech talent they need. For healthcare sector firms, hiring is not quite as much of a challenge — 17% describe it as “extremely challenging” compared to the next lowest scoring industry, cleantech, where 23% described hiring that way. However, healthcare startups are also the least likely to be adding staff, at least compared to the sectors.

Perhaps not too surprising, only the smallest of startups, those with fewer than 10 workers (which tend to be very early stage firms), say their biggest challenge, just ahead of finding talent, is the compensation it takes to land tech professionals. For every other size firm the biggest challenge is finding workers with the necessary skills.

Most in demand, especially among hardware startups, are the STEM skills; 82% of the executives said they are looking for those workers, and 40% reported no skills are more important. Only 17% said management, marketing, or other non-STEM skills are important to them.

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