Scaleworks Moves Into Heart Of Tech District

Sep 26, 2017

Scaleworks, or the Scaleworks Fund, is a $60 million pot of money that former Rackspace President, now Scaleworks General Partner, Lew Moorman and Ed Byrne have been using to purchase software companies, relocate them to San Antonio, and try to grow them rapidly...or as the name says, scale them.

Eighteen months ago the fund didn't exist. Now they have seven companies with 200 employees -- 75 in San Antonio -- and last week they moved their San Antonio contingent into 19,000 newly renovated square feet of the Savoy building. The Savoy is owned by Graham Weston's Weston Urban in the heart of San Antonio's Tech District.

Weston Urban and Scaleworks are both about invigorating downtown San Antonio with the energy of a startup culture. Scaleworks does that by growing companies and by importing the talent needed to keep the scene growing.

"All of this is a about people," says Scaleworks General Partner Ed Byrne, "We literally acquire companies that aren't based in San Antonio, and we build a new HQ here. We keep the existing people."

Scaleworks calls itself a venture equity model, or some combination of venture capital and private equity. The companies they buy are still startups, but they are earning between two and $10 million annually in revenue. 

Scaleworks buys companies that focus on solving problems for other businesses, so they can be varied in product.

"From the outside they may look different," says Byrne. "One's a billing company, ones a CRM, ones a customer decision analytics tool but the funnel and the tactics to grow these companies are all very similar," Byrne continues. The hope is these companies can grow 50 or a 100 percent a year by focusing on sales and marketing.

Scaleworks General Partner Ed Byrne

"Having a dedicated space, where we as operators can be with our companies and our companies can share with each other, I think that's a unique approach for a fund, so this building, having a space for us and our companies is huge," says Byrne.

They have acquired majority stakes in five companies last year, two companies in 2017, and may do one more to round out the first $60 million dollar fund. And in the Savoy they should have the space for awhile.