(The Center Square) – Seattle Mayor Katie Wilson on Wednesday signed an executive order aimed at retaining startup companies after they grow big enough to leave their local incubators.
The order proposes that Seattle set up a fund that would allow the city to invest directly in startups to avoid them relocating to cities such as Austin and Denver, where the cost of living is lower.
But the financing mechanism the city’s Office of Economic Development would develop remains undetermined, as does how much money the city could lend.
The city faces a projected $150 million budget deficit next year.
The executive order follows a city-commissioned report released Wednesday that said Seattle’s heavy reliance on a handful of tech giants has left the regional economy increasingly fragile, with heightened exposure to artificial intelligence disruptions that could shrink the city’s tax base.
The report was commissioned by former Seattle Mayor Bruce Harrell, who was narrowly beat by Wilson in the November 2025 elections.
“Businesses should be able to start here, grow here, and succeed here, and their employees should be able to build a life in the city where they work. That is a priority for this administration,” said Wilson in a press release.
“This assessment gives us an honest picture of where we are, and this Executive Order is how we start doing something about it. We are bringing Seattle’s business community in as genuine partners, and taking real steps to retain our strong foundation, diversify and grow our economic base, and make it simpler to do business in this city.”
The report’s findings highlight a steep concentration of tech employment in Seattle, with just four major corporations accounting for 25% of all software engineering roles.
By comparison, San Francisco’s tech talent is spread across 39 major firms, while San Jose distributes similar jobs among 18 companies, the report said.
This structural consolidation leaves Seattle 42% more vulnerable to AI-driven workforce shifts than the national average, a risk compounded by national trends showing an 18% to 20% drop in entry-level tech positions and AI-exposed roles for workers aged 22 to 25, according to the report.
Beto Yarce, director of Seattle’s Office of Economic Development, commented on the study in a statement.
“The findings are nuanced. Seattle is not in decline, yet our economic model is increasingly fragile,” Yarce said.
“The report affirms that past policy choices were rational responses to extraordinary growth, but it also makes clear that these approaches will not work for growing Seattle’s future economy.”
The report also notes that key revenue streams for Seattle municipal government, like the Business and Occupation tax and the JumpStart payroll tax, rely heavily on big-tech payrolls.
While overall business tax rates remain competitive with peer markets, the report said that recent rate increases and tax structures have begun discouraging local engineering hires, deepening the city’s exposure to corporate downsizing or office relocations.
“The path forward requires a strategy centered on retaining what makes Seattle unique and strong while reconfiguring for the industries and opportunities of the next generation. Competitiveness and affordability are inseparable,” said Yarce regarding the report.
The report said that although Seattle maintains an active startup ecosystem, scaling businesses frequently move away before maturing into mid-sized employers. But it noted it’s not all about Seattle’s high cost of living.
It said that while local living costs remain high in Seattle, key competitors in Silicon Valley face even steeper expenses.
The report said that the primary driver behind startup departures is a stark disparity in investment: venture capital funding continues to favor Bay Area AI ventures over local alternatives.
‘This divergence in capital and corporate retention has directly impacted local housing markets, contributing to declining home values in Seattle even as San Francisco real estate rebounds,” it said.
In a statement, Downtown Seattle Association President and CEO Jon Scholes said he is encouraged by the mayor’s attention to issues facing Seattle’s businesses.
“I’m encouraged that Mayor Wilson and the Office of Economic Development want to ensure downtown and the city are economically competitive regionally and nationally,” he said.
“Seattle must become more competitive in attracting jobs and investment. One thing is for sure, Seattle doesn’t need more taxes on businesses; we need more businesses in Seattle paying taxes.”
Scholes said Seattle’s current economic performance can best be described as sluggish.
“We’re trailing cities in the region and around the country when it comes to job growth,” he said.