I mentored in the Techstars program in Berlin a few years ago. Nice people and they mean well. But in the end the program I mentored in was a dud. As far as I know none of the companies were invested in and the upfront screening wasn't great either. I.e. it was obvious to me early on in the program that there were no unicorns anywhere in sight.
Not that I'm an expert on spotting those of course. But as it turns out, my skepticism was justified as there were no investments at the end of the program and few of these companies (if any) survived very long after. I was kind of sad about that because there were a couple of founders I really liked there.
Several of the companies actually died early in the program because of the usual founder issues, or the lack of coherent plan. Apparently, none of these issues came up during screening.
I've stepped back a little from mentoring (at least for them) because it's kind of time consuming and I got the vibe that Techstars took my time a little too much for granted. You get invited to some events and I got the hoody (which is a nice one) and that's about the extent of their appreciation or engagement. The promise of a great network (to both mentors and founders) is hard to live up to if you don't nurture that network. And there's not a lot of that nurturing happening lately.
Would that most likely be an artifact of not enough in-flow/supply of startups to choose from?
If not, a mechanism to let the other participants anonymously vote and rate and comment such things, and then administrators can look at that data - and see what specific admin(s) was/were responsible for inviting them in, and then address the issue as close to the core as possible might of helped?
Isn't the whole point of a VC/Accelerator to take investors' funds and idenfity good investments to make, while not making bad investments? Is that not the core of their job?
If the only investments available are unprofitable, you don't invest.
I don't see why you'd introduce a reality-TV-style backstabbing mechanic, just to get the 19 year old founders to do the work the rich, sophisticated investors were supposed to be doing but weren't.
They always say that finding great investments is much more important than avoiding bad investments. This is because the upside is unlimited, whereas you cannot lose more than 1X what you put in.
However, Techstars always had an adverse selection problem : the best companies usually prefer to join YC.
>This is because the upside is unlimited, whereas you cannot lose more than 1X what you put in.
Well, yes, this is exactly what someone who sells this kind of service would say. Where is the skill, though? Just spray and pray. Eliminating survivorship bias, is it actually successful, on average? Can it beat the S&P?
The upside is certainly not unlimited, and you can lose all of your money before you find a big winner.
>the best companies usually prefer to join YC.
If they are already the best companies, what does YC add? Besides, most of the best companies don't join any incubator.
There are a couple niche ones - Team8 (Cyber), PearVC (YC lite), Antler (YC for Asia), Sequoia Surge (YC for Asia but better terms), Thiel Foundation - but yea, it is hard to beat YC's mentorship and network.
I also think that the Techstars staff members were not adequate. Every single staff member had left by the next year. And when I would email the subsequent MDs about anything, I'd get no reply.
The angel investing landscape is filled with ZIRP morons, both founders and investors. You attend these things (I do, less now) and the conversation revolves around raising money, exits, and nothing else. Hardly any talk about building a business or the actual products. Raising money to exit is a game in itself for these people.
Check out VCs Congratulating Themselves twitter feed.
some people might call this "money-first" companies.. financialization of company startups normalized a lot of historically-impossible means of operation IMHO
I live in Berlin and am an active mentor with the Berlin program, too. I also participated in TS in the US, actually the Seattle program in 2016 with Chris DeVore (author of this post).
> it's kind of time consuming and I got the vibe that Techstars took my time a little too much for granted.
The Give First ethos applies here. If you approach TS with this mentality, you'll get more out of it.
> The promise of a great network (to both mentors and founders) is hard to live up to if you don't nurture that network.
I agree that, perhaps, there should be more, consistent events to bring the network together. For instance, in Seattle, we had regular mixers that were just at Startup Hall--swing by, grab a beer from the keg, and have a chat. Events pulling the network together don't have to be a heavy life.
But I think you also get out of it what you put into it: Again, give first, and follow up with folks and you'll get more out of it.
That's the theory. I gave quite a lot of time to them first. There's just not a lot coming back in kind. Techstars seems a bit complacent about people giving them their time. But they are not a charity. So they've been cutting on giving back. From having talked to other mentors, the quality of the network used to be better when they were more engaged. Even the networking events seem to be very infrequent at this point and frankly the last few ones weren't great. Somehow that never recovered after COVID.
Give first as a general mantra sometimes works. But in situations where you're constantly giving to new people who have never gotten anything from you before, and therefore want the same "give" that you gave the earlier people means that you never get to the return part. Instead you're always giving. New people come in, want the same give that you gave others, and then at some point you're not getting the return because those new people are placed with even newer people. This is the revolving door of give, and why the give first never results in the... what next? Give first, get later? A lot of times it's give, give, give, with no return, until you finally tire out.
I was a mentor for the Austin program for every year but the last (2013-2022) until they recently closed it.. and "top mentor" a half dozen times. I also worked with a number of other programs once covid hit.
Overall, I had a blast, made some great friendships, and did most of my angel investing in companies I worked with through the program. One died, a handful were acquired, and the rest are still operational.
That said, I don't think that Techstars problem was only chasing the cash. I think it came down to the problem they were solving disappeared and they didn't shift.
Rewind to 2008 and the number of operators who had "been there, done that" successfully and were willing to share their time was exceptionally rare. By 2013 when they came to Austin, it was still uncommon but there were a few pockets here and there. Techstars was exceptional at collecting and coordinating them. Fast forward to 2018/19 and the sheer volume of people who had useful experience and the ability to share it was massive.
One of the things the article nailed is the need for a good Managing Director (MD). If you had a good one, they were able to leverage those local (and some remote) ecosystem to help validate ideas, streamline the founders' thinking, and focus them on the goals. If you had a weaker MD, sucks to be you. Techstars HQ's only role in that was picking the MD. Beyond that, you were on your own.
When covid hit, that ecosystem shifted and suddenly the number of people with experience and the ability to share it exploded, money flowed like water, and people's mindset shifted. The Techstars program didn't iterate and even lost the camaraderie that they'd fostered for years. When they took strong political stances for and against different groups, a bunch of mentors drifted away.
On the other side of covid, now we have way more people with experience, way less money, and way fewer social bonds. Techstars doesn't address those needs.
> When they took strong political stances for and against different groups, a bunch of mentors drifted away.
Out of curiousity, could you could elaborate on this a bit? I'm not that familiar with Techstars aside from being generally aware of them as a large accelerator for many years.
Having been through both Techstars and YC, this article is painfully accurate.
Being part of both networks has been an interesting experience in culture.
YC culture fosters an extremely strong network of founders, even outside the bay area. In London we're constantly pinging each other for advice - it really helps.
Techstars does not have this and makes little effort to do this. I remember speaking to some Techstars people in London trying to see if they might Foster more of the community here, but they had no interest in it unfortunately.
It's a real shame because some Techstars programs with the right MDs had YC quality (Shoutout to Connor), it's just the quality wasn't distributed or cultivated uniformly. It's heavily dependent on the MD of the program.
After getting to know the Boulder-area TechStars people, I tried to get a TechStars "chapter" going in San Diego back in 2010 and like so many things about the startup world in San Diego, it just wasn't going to happen. The San Diego M-F 9-5 lifestyle always was more important than taking over the world. Plus, in general I found mentoring San Diego tech startups to be essentially pointless: nobody listened, nobody cared, so why even bother. Finally I found the core TechStars organization to be a bunch of cats, un-herdable, no "there" there. I never liked the whole "star" thing as it reeked of "rock stars" and was a little too "bro" for me. Bottom line, it was screamingly clear TechStars was never going to compete with YC (which I've never been a fan of either, but at least they're organized and determined and focused), so no surprise when it never did.
> The San Diego M-F 9-5 lifestyle always was more important than taking over the world.
Sounds positive to me. Fuck your “world changing” startup idea. That’s just religion. You want me to work hard, treat me with respect and pay me (in that order).
edit: mark my words, there will come a time when you lose a highly valuable employee because you thought it was easier to treat people like a kubernetes configuration.
Its a startup. You will become fantastically rich as a founder/early employee if the startup takes over the world. You don't take over the world working a 9-5.
People entering this environment SHOULD know what they're signing up for. Its not like startups are the only jobs out there.
You will become fantastically rich as a founder/early employee if the startup takes over the world.
While this is still generally true for founders, it hasn't been true for early employees in over a decade. VCs decided to capture all of that surplus for themselves.
I think if we made starting up more accessible & possible, if healthcare & child card & housing weren't a mess, we'd actually see far far far far more positive world changing shit coming. And many tiers of merely good positive economic contributors below that.
Startups should be accessible. It's a fault & a problem that so many possibilities have been winnowed away. The glory of 120 hours a week is not the only path.
Health insurance coupled to employment is one hell of systematic advantage for large companies when competing for labor. Bigger company = bigger risk pool.
There is nothing wrong with being a startup and being solidly profitable, you know?
Only VC-backed startups need to "take over the world" because the VCs need their 10x rockstar.
A company doing $50 million per year with a handful of employees is going to be way more profitable for everybody than a VC-fueled rocket that has a 99% chance of flaming out. Remember MP3.com? Lots of San Diego tech people still do ...
I view the original assessment as "San Diego tech workers understand the reality of their value and can't be taken for a ride by venture capitalists--woe is me."
I found that San Diego tech workers generally have higher clue than most geographic areas.
The less experienced are very solid workers and learn really quickly. However, they're not 4 year Stanford students with filthy rich parents who can afford to go bankrupt multiple times. They're coming from community colleges and state schools, and they need to earn money. In return, they'll work their ass off for you.
In addition, there are quite a few very experienced greybeards scattered in that scene (tech in San Diego goes WAY back--Linkabit spawned a bunch and computers were huge early--Silicon Beach Software and PC Power and Cooling for example). However, they are going to demand appropriate compensation and will not put up with bullshit. I love working with them.
Don't like the San Diego tech scene? Your loss--my gain.
Nah the original assessment was too many San Diego tech workers would rather go surfing or play networked first-person shooter games than get something momentous done. There was always something more important to do than do the work and build the thing and make a difference in the world. I did the San Diego startup scene for 25 years. I worked at MP3.com; employee 12 I think. I also started 3 companies in La Jolla, was very active in the SD startup scene for many years. There are great engineers there, don't get me wrong. But the work ethic is simply different than SV, which is just the way it is, not gonna change. I don't think I'll ever do another startup in San Diego though. Elsewhere, sure, but not there.
Used to run ads in 1988-90 in ComputorEdge for my first startup (Coconut Computing; we ran the COCONET online service in San Diego then). Didn't they change their name to ByteBuyer? We used to call them ByteBuyor to pay homage to the original name.
I was part of Techstars Seattle in 2019, though we were mentored by Chris's counterpart at Founders' Co-op (Aviel). It was also a partnership with Amazon, and I really don't have enough good things to say about that experience even though our company ceased to exist less than a year later.
I'm only half-surprised.
I had a great experience, we learned a ton, and if anything was going to set us up for success it was our time there. Companies are mostly doomed to fail, but our time in Seattle was pretty transformative for me personally. It allowed us to refine our focus and dedicate ourselves wholly to building something people wanted (which, turns out, wasn't that many people obviously). The support and guidance we received from Aviel, our Amazon partners, and fellow cohort members were unparalleled. Say what you want about VCs or Amazon or startup founders (and yeah there are many things to be said), but I really have nothing but great things to say about all of the individuals from our time there. Admittedly, my opinion doesn't carry any particular importance.
On the other hand, I'm not surprised at all when I reflect on the actual Techstars program. Techstars, as an organization, seemed totally in the periphery for much of the program. The lion's share of valuable advice and resources came not from the organization itself, but from everyone else.
Echoing another's sentiments, the value of Techstars seems heavily influenced by location and the mentors involved. We were lucky to only be thinking about two great programs, Seattle and NYC. If we had ended up somewhere else maybe I'd be completely unsurprised.
We went through Techstars Chicago in 2016 and found the network to be top-notch. We met so many incredible people who helped connect us to resources we could not have gotten otherwise.
I think Techstars' inability to pivot, go back to basics, and learn from their mistakes all contributed to their downfall. Now, I know they're not completely shutting down, but I don't know how they'll come back from this. They spent so many years touting that they were the anti-YC. Focusing on areas like the Bay Area means they're going to be competing with other programs and resources that have been part of that community for years. It's going to be an uphill climb for them and I don't think it's going to work.
I did Techstars in London in 2013 (an early cohort there) after spending a decade in the Bay Area. Back then, it felt like the glue holding the entire program together were the founders themselves and one particularly good Techstars staff member.
I felt proud going through the program until I learned about the branded programs emerging "Techstars Disney" and "Techstars Barclays". It felt like the prestige was vanishing, and I rarely mentioned it on my CV afterwards.
Funny though, I raised about $1M through the Techstars program, and over $10M through other VCs. The Techstars VCs were the least helpful (but this could have been the London ecosystem at the time. London, these days, is quite good when it comes to early stage, especially some of the syndicates like Ventures Together. I digress).
Techstars should have bought Indiehackers or built a community like HN. I realize Indiehackers might not be a perfect fit (bootstrap vs VC). The fact that I’m on HN just about every. Single. Day. Keeps YC top of mind way more than I could imagine it would otherwise.
You can't "build" a community like HN. Not even YC could (again) if they wanted to. Things like good mods is still just maintenance. It's a single lucky constellation of stars, and the gravitational pull after that.
I really hope if YC goes under that HN has some support from elsewhere. This is the only social media I do because of how good the insights are in the comments and I don’t think I could recreate the feed quality anywhere else, even on my own.
Do you think there are many VCs who daily HN too, which is why that comes to mind, or just the association is useful for you to reinforce the values of feeling like you're being witnessed?
I would say the daily subconscious reminder that I’m in a community that is run by an incubator. It keeps that incubator top of mind, it’s even in the URL. The built in marketing for YC helps keep them at the top.
At some point they simply stopped trying to compete with YC (probably because they can't). The terms are worse, the program is worse, and the only differentiation is not being in the Bay Area (which YC moved away from anyways).
The end result is ~nobody would choose Techstars over YC. In a power law business, that's a death sentence.
The geography thing is a big deal to me. It seems YC still requires SFO area during the duration of the program. Are there alternatives?
Techstars didn't seem appealing not for the concept, but because it smelled funny. I think there is room for a robust global YC-style program. I see a lot more opportunities outside of SFO than inside, and especially in significantly different markets (and especially in ones with lower cost-of-labor).
YC effectively already is that global program. There are YC startups from all over—spending 3 months in SFO does not require you to move there forever, and many do return to other markets/locations.
No. It's not, unless you're straight out of college.
I've done multiple successful startups, have a pretty good record of securing funding, customers, and exits, so I'm confident I'd be an easy bet for YC, simply based on track record. I'm also confident that I'd enjoy YC and learn a lot (even though I expect I'd be older than most of the kids there).
However, I've mostly cut out travel since I've had a family. I turn down speaking engagements and conferences, and limit to a very small number of trips a year. It's worth it.
I'm certainly wouldn't advise anyone to try explaining to their child why they won't see Daddy or Mommy for three months.
If I were to categorize the mistakes in my life, most involved prioritizing work over family. Older people always tell younger people that, and younger people never believe it.
Do you have a family? If so, you're certainly entitled to your perspective, and I do know ambitious people with families who do think this way, but they are a tiny minority. If you don't have a family... well, this is one of the many things to fully comprehend until you've actually "been there done that".
... or I could do what I'm doing, and sit in my bedroom on my butt, mostly coding up a prototype, relying on being well-known enough to bring in money based on my personal brand, collecting a reasonable salary.
You have no idea who is competing for whom.
I'd enjoy YC, and I'd learn from it, but it's definitely not something I need to do. Have a quick list at the ages and backgrounds of people who started large companies.
Another life lesson, this one for you: Don't be a dick. There's no upside, and a lot of downside.
> ... or I could do what I'm doing, and sit in my bedroom on my butt, mostly coding up a prototype, relying on being well-known enough to bring in money based on my personal brand, collecting a reasonable salary.
That's fine? I'm not criticizing that path: it's more pleasant, enjoyable, and probably better for almost everyone.
You're coming at me with a level of hostility that is unwarranted.
> Another life lesson, this one for you: Don't be a dick. There's no upside, and a lot of downside.
You're the one being patronizing and talking down to me for no reason.
YC is simply not interested in people who's goal is to earn a "reasonable salary." It doesn't fit their business model.
That doesn't make YC bad, and it doesn't make you bad. It just makes you a poor fit.
Please reread what you wrote: "Sorry, but if your ambition is to start a $1B company, 3 months in SF is a relatively small sacrifice no matter your age."
That's where the hostility, ignorance, and arrogance came in.
Startup incubators are interested in people who are able to build billion-dollar startups. That's the business model. Full stop.
Random hazing rituals might, perhaps, be a good prediction of how vested someone is, and with no track record, you look for sharp, teachable, willing to work hard, and committed. However, a track-record of having built successful businesses is a much better predictor of being able to do so again than some hazing ritual about being willing to make absurd sacrifices for no reason. Indeed, being willing to make that sort of compromise is probably a good indicator the person has poor judgement, since if there's one thing startups need to do is aggressively prioritize.
> You're the one being patronizing and talking down to me for no reason.
Reread what you wrote, and you'll see the reason. It's for your benefit. You have no idea who I am, and you decided I'm a "poor fit." Assume much based on zero information?
Figure out how not to be a dick. It will hurt you in the long run, more than you imagine.
The problem with $20k for 6%, even back in 2016, is that it immediately filters serious founders unless hyperfocused on segments like university students (i.e. old YC) where there's a good reason for being broke. It's simply better to have a day job than to take that offer. The alleged value is in the accelerator itself, which here was nebulous at best.
A year or so ago I noticed that an Ivy League finance guy I used to know, who had no experience with technology, had moved to an attractive foreign locale to lead a Techstars program. I recall thinking 'nice job if you can get it'.
I see no reason founders should to go to VCs any more, these days if your startup isn’t able to become make money in a few years there isn’t any point to the startup anymore.
The days where VCs just fund anything is over and thr effects of post-ZIRP are kicking in with the closure of these funds.
Time for all startups to make a profit instead of trying to go from round to round and gamble and then inevitably shut down or get sold for scraps (if lucky)
What if you want to do something expensive, like design a new fusion power plant? That can’t make money in a few years. There’s many types of businesses that need investment to get rolling.
Sounds like a recipe for an incredible sunk cost for investors and everyone.
You might as well work at an existing business rather than waste investors money when you know it's an expensive endeavor and you know there is no route for investors to get their money back.
Especially in this market where money isn't cheap anymore, not everything is investable.
I didn’t say no route to get investor money back - but some things require a large capital investment to get started. Are you suggesting everything worth doing can be bootstrapped?
>Seattle program alumni like Remitly, Outreach and Zipline are regularly held up as evidence that Techstars can produce billion-dollar outcomes for both founders and investors, something that has happened less and less often in recent years.
Zipline looks cool, tough space to compete with Amazon though. The other two I've never heard of.
What makes these "billion dollar" successes? It looks to me like like Remitly is public, and down 60% since IPO. Who won here, besides insiders who cashed out? Certainly not current shareholders.
The tech world has a strange way of measuring success. The author is conscious of (and mentions) ZIRP implications, but doesn't tie it to the their own work. VCs trading insider shares at escalating valuations isn't real value.
Edit: I think my comment sounded harsher than I intended. These companies are successful, in that they exist and are delivering product to consumers. That's great. But "billion-dollar" outcome is a stretch in the face of ZIRP. How much value is there net of investment?
Zipline also delivers on-demand blood to hospitals in Africa over forests [0] in a consistent and time-constrained manner. I don't think Amazon can or want to compete with them on that space.
They are not in "here's your hamburger" business only.
TS is heavily dependent on the MD as the comments have alluded. Fingers crossed Moisey comes on and tells the DigitalOcean TS story because it's a great one, but my understanding is Jason Seats (now a vc) the MD for TS Cloud was absolutely fantastic.
Alex Iskold (now a vc) , TS NYC, Fantastic and Chris DeVore (now a vc) the guy who wrote this, fantastic. Then you look at TS Seoul and others, I've never heard of anyone having a good experience. With TS or any accelerator/incubator you should be VERY discerning about why you're doing it, not just do it because it's a way to get going.
Having a simple clear focus is hard to undervalue. Since doing YC 6 years ago there has never been a second of doubt about the priorities (imo).
YC is there to make money for its investors. And the way to do that is to invest in the best startups and make them huge.
The only source of conflict then comes from YC vs. the startups. For example, do you enforce strict legal structures on all companies. And here the dominant priority is of course YC itself. But this is expected, and given the rationality also easy to work with.
My only experience of Techstars was a chance introduction in 2015 to Jon Bradford, who iirc built Techstars Europe. Back then I ran a 5 person startup split across London and Serbia, targeting enterprise with an observability tool for data science / data engineering teams.
It was mid-2015 and we were a couple of years in, boostrapped, and had just landed our first sale (to a big 6 energy provider in the UK). One day, as I was walking back to Waterloo Station from our WeWork on the Southbank, I struck up a random conversation with someone who also happened to be headed in the same direction, incidentally also ran a startup, had been through Techstars' programme and was very impressed with their experience. They suggested I speak to Jon, made the intro that evening, and I ended up speaking to him a day or two later.
When we spoke, I opened on autopilot with the usual who/what/why/how elevator, explaining that I ran the commercials out of London but that the rest of my dev team was based in Nis, Serbia.
"Oh Nis, yeah I know it. On the way from Belgrade to Sofia, right? Yeah, I know it well."
I remember having to check myself. For context, Nis is a little known city of 200k people in Southern Serbia, dwarfed in popularity by Belgrade or Novi Sad. It's also my home town, where I spent the first 10 years of my life. I'd lived in the UK for 20 years at this point, and had told my origin story to probably a couple of thousand people, yet this random VC bloke was the first one to not only have heard of the place, but to take a genuine interest in it and the local tech scene (it turned out that he knew it because one of Techstars EU's first successes, Petcloud, also had a presence there).
Pretty early on in that conversation, it was clear to Jon that we were far too far along in our journey to be interesting to Techstars, and he told me as much. It didn't stop him from talking to me for almost an hour though. He gave me a bunch of advice and offered to introduce me to a number of very relevant contacts (which looking back I could have taken way better advantage of had I not been obsessed with our sales pipeline).
I know this post has ended up like some kind of weird eulogy, but of the hundred or so VCs I must have spoken to in my life, 'Jon from Techstars' still stands out as the most memorable and genuine by some margin - a very atypical VC in my experience. I'm not sure how beneficial those qualities were for the long term success of Techstars, especially reading some of these comments, but I do remember feeling almost disappointed that I finally had customers because it meant we weren't eligible for Techstars. I still feel a little disappointed almost ten years later, so I guess they must have had something there.
“It began with an effort to extract “sponsorship” dollars from local service providers: the lawyers, accountants, recruiters and PR firms that cater to startups.”
The YCombinator strategy was to give founders money and get them to focus on building a product.
Techstars, on the other hand, sought to extract money from founders to support their sponsors to nickel and dime dreamers and bog them down with time wasting distractions like articles of incorporation and formal business plans and commercial bank accounts and press releases —- because these are the vanity services their sponsors provide. You feel like you are building a company when you consult a lawyer and accountant creating an S-Corp and delegating shares.
But Y Combinator has had direct access to the unlimited fount of free money created by zero interest rates so they only needed to appease the vultures capitalists with pump and dump schemes.
Both methods are flawed, even if the stated aims of the organizations are noble.
> By making corporate funders, and not startup founders, their primary customer, Techstars built a centrally-controlled sales- and operations-driven culture that made startups the product, not the customer. As soon as the top tier of startup founders figured out that YC had their interests at heart in the way that Techstars once had, but no longer did, the game was over.
Not that I'm an expert on spotting those of course. But as it turns out, my skepticism was justified as there were no investments at the end of the program and few of these companies (if any) survived very long after. I was kind of sad about that because there were a couple of founders I really liked there.
Several of the companies actually died early in the program because of the usual founder issues, or the lack of coherent plan. Apparently, none of these issues came up during screening.
I've stepped back a little from mentoring (at least for them) because it's kind of time consuming and I got the vibe that Techstars took my time a little too much for granted. You get invited to some events and I got the hoody (which is a nice one) and that's about the extent of their appreciation or engagement. The promise of a great network (to both mentors and founders) is hard to live up to if you don't nurture that network. And there's not a lot of that nurturing happening lately.