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Jun 03

TechStars: Everything That’s Great About Startups

Posted by: Mark Solon        
 

(And Why I Love Being An Early-Stage Venture Capitalist)

Yesterday, my partner George Mulhern and I spent a very long and exhilarating day at Techstars in Boulder, CO meeting with ten raw start-up teams who have been selected to participate in this year’s rigorous TechStars bootcamp. For the next three months, this very lucky group of entrepreneurs will be working 14 hours days side by side in “the bunker.” Why are they lucky? Because they’ll get the benefit of being immersed in the best start-up mentorship environment I’ve seen in my career. (Want to see what it’s like to be part of TechStars? Check out this video)

George and I meeting with two of the "founders"

George and I meeting with two of the "founders"

You see, TechStars isn’t about cheap rent and phone lines and shared costs. It’s about one generation of successful entrepreneurs passing the torch on to the next and believe me, it’s one of the most unique environments you’ll ever see. For instance, it became evident quickly that there’s a fraternity growing between the founders (as the new teams are called) and there’s an “us against the world” mentality that is developing between them. The energy is off the charts. Coders help each other, founders bounce ideas off of each other, and then they all jump on their mountain bikes to go blow off steam together before grabbing a quick bite and heading back to the bunker to work late into the night.

David Cohen addressing the "founders" in the bunker

David Cohen addressing the troops in the bunker

After 45-minute meetings with each of the 10 founder teams, you’d think that we’d be ready for the rack but we were just getting started. We then sat in on “pitch night” where each of the teams took turns practicing their 5 minute “pitches” to a few dozen of the local mentors (a venerable “who’s who” of the Colorado entrepreneurial community) who gave them both oral and written feedback. We finally made it to a late dinner with a few of the teams and I had a chance to visit with David Cohen (Executive Director and co-founder of TechStars) and ask him a few questions:

You received almost 600 applications from start-ups all over the world to move to Boulder, CO for three months which is an enormous commitment. What are you giving away?

TechStars is about mentorship. What we’re doing is providing access to a tremendously talented and experienced group of mentors from across the country. More importantly, these mentors are truly engaged in meaningful ways with our companies. In short, they’re here to help them succeed, and are focused on the selected companies for the entire summer. It’s a truly tremendous opportunity for the companies we select to participate in the program, and I think that’s what’s so attractive for them. We also provide a small amount of seed funding, office space, legal, PR, hosting, and other services, but this pales in comparison to the value provided by the mentors.

How is TechStars different than a traditional incubator?

I don’t really think of TechStars as an incubator at all. Our companies come for a defined period of time (3 months), and we offer focused mentorship and funding. Traditional incubators are typically charging entrepreneurs for office space. TechStars actually invests in each company with our dollars and time.  But again, the major difference would be the focused mentorship delivered in a compact timeframe. In the end, our companies have to live in the wild – our model is not set up around “incubating” them over a long period of time like traditional incubators.

What was the impetus for you to start TechStars?

I was angel investing on my own, and was generally dissatisfied with how it worked. So I started TechStars as a way to improve the process, and to increase the amount of interesting stuff happening here in Boulder (and now Boston).

What’s it like down in “the bunker” after the first few weeks?

It’s a blast. The founders are all becoming fast friends, and there is always someone interesting visiting. In the first two weeks, we’ve already had Microsoft, Yahoo, Google, Facebook, and Digg drop by and spend time with our companies. Mentors are holding office hours regularly, and the teams are evolving. One or two of the ten companies have already significantly changed their direction. The first part of the program is all about connecting with the mentors and sharing ideas to make sure the companies are working on the right things.

What’s in it for the mentors?

Most successful entrepreneurs love to work with new founders anyway. TechStars provides them an organized and high quality way of doing this, while at the same time providing a social outlet to build their own networks and have great new experiences. Of course, many are also potential investors, so an early look at the companies is a draw.

Why does this work so well in Boulder?
Boulder is a very collaborative town to begin with. TechStars draws on this experience and provides a focal point for these sorts of mentorship activities. There’s a true desire to see others succeed here, and a wealth of experienced entrepreneurs who are excited to give back to the community by helping up and coming entrepreneurs. In a nutshell, that’s what TechStars is all about.

This is the third year of TechStars. How are the graduates doing?
We tend to look at this by class or year. Three of the original class of ten from 2007 companies have already been acquired in very positive exits. All of those companies exited with only angel funding. Of the remaining seven, five are angel or venture backed and still operating, and two are defunct. The second class of ten companies (from 2008) is about a year old now. Six of those companies are angel or venture backed, and a seventh is profitable. Of the remaining three companies, two are still operating/bootstrapping and one is defunct. In short, about 75% of the companies are funded, profitable, or have already exited. We think that’s pretty good!

What’s your favorite part of doing this?
The mental exercise. I can’t imagine having more fun.

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6 Responses to “TechStars: Everything That’s Great About Startups”

  1. avatar John Glerum says:

    Hi Mark,

    Don't be too tough on us local incubators. We will be stopping by one of these days to let you know what we are up to here at the BSU TECenter. You might be surprised.

    Besides who wants to drive all the way and stay in Colorado for 3 months?

    Entrepreneurially yours,

    John Glerum

    • avatar mbsolon says:

      Hey John,

      That\\'s the shitty part about blogging, you need to carefully watch how you frame everything because you never know who you\\'re going to offend! Mea Culpa my friend, didn\\'t mean anything negative about incubators. Incubators like BSU TECenter and TechRanch in Bozeman serve a critical role in the start-up continuum! Hope you\\'ll let me buy lunch when you come by!

      • avatar John Glerum says:

        Mark,

        Business 101 requires relishing competition where ever you can find it. Comparisons to Boulder are healthy. My reaction was hasty, as we really need to succeed here in the TV. Besides our cost of living has to be significantly lower than Boulder. Let's ask Coach Hawk and his assistants about that?

        Let the entrepreneurial contrasts, debates and collaboration continue.

        John

  2. avatar John Fischer says:

    My favorite part of this post was this "Boulder is a very collaborative town to begin with. " I agree. Boulder is just the right size so that different industry groups need to mix because few groups are big enough to sustain a independent community. Yet we are big enough to have a wealth of entrepreneurs that never want to leave the front range.

    • avatar Mark Solon says:

      Hi John,

      As someone who has invested in start-ups both on the east coast and here in the Intermountain West, I continue to believe that Boulder is one of the best places in the world to start a company. The ecosystem of support is tremendous and easily accessible. We're trying hard here in Boise to take the best of what Boulder has to offer and make our own start-up ecosystem be the best that it can be!

  3. [...] familiar with TechStars (Boulder, CO and Boston), you should check it out (My partner Mark wrote a post a while back on Techstars as well).  It is an amazing program that was started and is still run by [...]

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