Software Study Ranks San Diego #7, Cites Prowess in Scientific R&D

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roughly twice as likely to work in scientific R&D than their counterparts throughout the state of California.

In the same way, the study says venture capital investments in San Diego software development are percolating into other, software-dependent industries—like health IT and genomics—where some life sciences companies have been working with information systems technologies.

“I was encouraged by the data, there is more going on here than many of us were thinking,” said Jeb Spencer, managing partner of TVC Capital, a small private equity fund that invests in software deals and helped underwrite the study. Spencer said the study has led him to re-think the way he has been assessing the software sector in San Diego, and to see that software-dependent companies like Qualcomm (NASDAQ: QCOM), Illumina (NASDAQ: ILMN), ViaSat (NASDAQ: VSAT), and General Atomics are now driving much of the software innovation in the region.

At the same time, some cracks are just beginning to appear in Silicon Valley’s seemingly impervious reputation as the center of almost everything that matters in technology innovation.

In a recent post on TechCrunch, Bizness Apps CEO Andrew Gazdecki explained why he is moving his six-year-old mobile app company from San Francisco to San Diego:

“The glamour of San Francisco can outweigh its benefits,” Gazdecki writes. “The high cost of living, extreme recruiting competition, and lengthy commutes take their toll on companies regardless of their success.” In contrast to San Francisco, Gazdecki writes, “San Diego ticks the boxes for tech startups. Its growing tech scene allows entrepreneurship to blossom.”

As for the software power index nationally, the study used a composite score to analyze the software sector in the 50 largest U.S. metro areas. Instead of basing its rankings on a single category, the index combines four key factors: the concentration of software developers in a region; the ability to attract, retain, and develop talent; the growth and prosperity for developers; and attractiveness for capital investment.

The index yielded some surprises.

One surprise is that Raleigh, NC, and Baltimore, MD, rank ahead of San Diego as regional hubs for software development. Another surprise is that both Los Angeles and New York rank well below San Diego.

In Raleigh and Baltimore, both metro areas have dense and growing tech scenes, according to the study. Raleigh’s proximity to major research universities (North Carolina State, UNC-Chapel Hill, and Duke University) means that the area ranks high in its ability to attract and retain software developers with advanced programming skills. Baltimore benefits from the nearby presence of Fort Meade, which includes the US Cyber Command, the National Security Agency (NSA), and Defense Information Systems Agency (DISA).

New York came in 15th in the software power index, and Los Angeles at 16th, even though both metro areas have made concerted efforts in recent years to demonstrate their tech prowess and to promote their regional tech cluster as “Silicon Alley” and “Silicon Beach,” respectively.

As the study puts it: “Los Angeles suffers in large part due to the size and complexity of the region’s economy, depressing its concentration score below the average, but the region also exhibits slow job growth and talent shortcomings, according to the index. LA has a relatively low share of computer and math degree holders age 25 and older, and their replacement rate of degree-holding workers in core software firms is below average, indicating that firms have challenges attracting and retaining top talent.”

New York City, despite its size and economic complexity, “actually has a higher than average concentration of software developers, but lacks a concentrated pipeline of talent coming out of the region’s universities” according to the study. The region’s difficulty in replacing developers also pulled down its composite score.

Top 20 metro areas for software, from “Software Development: Driving San Diego’s Tech Ecosystem”

Top 20 metro areas for software, from “Software Development: Driving San Diego’s Tech Ecosystem”

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Bruce V. Bigelow was the editor of Xconomy San Diego from 2008 to 2018. Read more about his life and work here. Follow @bvbigelow

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