Tech Startups Worry They Won’t Be Able to Find the Talent They Need

More technology start-ups will be looking to hire than at any time in the last four years, 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 report 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 percent of the tech start-ups 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 start-up hiring, according to the report, is Texas. Washington is a close second, with the Boston area and metro New York are third and fifth respectively.

Talent challenge

Software and hardware start-ups report having the hardest time finding the tech talent they need. For health care sector firms, hiring is not quite as much of a challenge — 17 percent describe it as “extremely challenging” compared to the next lowest scoring industry, clean tech, where 23 percent described hiring that way. However, health care start-ups are also the least likely to be adding staff, at least compared to the sectors.

Perhaps not too surprising, only the smallest of start-ups, 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 start-ups, are the STEM (science/technology/engineering/math) skills; 82 percent of the executives said they are looking for those workers, and 40 percent reported no skills are more important.

Only 17 percent said management, marketing, or other non-STEM skills are important to them.