San Antonio startup rides ‘silver wave’ by acquiring defense contracting expertise

Companies that serve the government through contracts often live and die by those contracts, hiring and letting go employees to match the work that comes in.

In May of this year, longtime Air Force contractor Diversified Technical Services Inc. (DTSI) was forced to lay off 137 of its 188-person staff after one particular contract it worked on for decades went to a different company.“We would have survived,” said Greg Wicketts, who joined DTSI in 2005 after a stint in the Air Force and was promoted to president and chief operating officer in 2016. “But just survived.”Now, however, the company — founded in Dallas in 1980, moved to El Paso and eventually relocated to San Antonio a decade ago — has found new life, Wicketts said, as a business unit of Irys, a San Antonio tech company that began its own life seven years ago seeking to ease communications between residents and local governments.

Founded by Eduardo Bravo, Albert Gomez, and Beto Altamirano in 2017 as CityFlag, Irys acquired DTSI in an all-cash deal announced earlier this week. DTSI will keep its name, its approximately 60 employees, and its existing defense sector contracts.

The acquisition is part of a "silver wave," said CEO Altamirano, where young companies are buying older businesses and revitalizing them.

"We are definitely considering that business model," he said. "I believe it will help us build a large conglomerate of different solutions, services, and products. So yes, that's definitely part of our roadmap." For a startup, entering government and Department of Defense contracting is very challenging, said Bravo, Irys' chief operating officer. "Besides relationships, you also need past performance," he said. "The government won't do business with you unless you have past performance."

Irys did secure a $1.15 million Air Force Small Business Innovation Research contract in 2020, which allowed it to raise additional funds and build a prototype app, but it ultimately was not deployed.