Techstars Shutters Accelerator Programs
Techstars has decided to shut down Techstars Boulder, Techstars Seattle, and several additional accelerator programs.
In a blog post from Maëlle Gavet, the Techstars CEO, she shared that the popular accelerator program will refocus its efforts on “running in-person programs in the largest tech ecosystems.”
As part of the changes, Techstars is moving its headquarters from Boulder, Colorado, which has been its home for 17 years, to New York City.
So, what led to the decline of Techstars?
Increased competition
When Techstars started in 2006, they were one of two major players in the startup accelerator ecosystem – Y Combinator had started the year prior. There are now several dozen startup accelerators worth considering for founders, including industry vertical-focused programs like Embed by Conviction (AI) and The Mint by BTV (Fintech). The increased competition has made it more difficult for Techstars to attract the best founders.
Dependence on corporate partners
Techstars, like any startup investment vehicle, makes money when startups they invest in have a liquidity event and can distribute capital back to them. It takes a very long time for this to happen, often between 8 and 12 years.
Since Techstars does not charge management fees, which venture capital funds typically draw from to cover salaries and expenses like office space, they need to generate cash.
To cover its short-term cash flow issues, Techstars partners with corporations to launch accelerator programs. Some current Techstars partners include J.P. Morgan, Cox Enterprises, and eBay.
In exchange for money, corporate sponsors get to engage with startups in the program. They want to sell the startups in the program and convert them into customers.
As a result, instead of spending their entire time serving founders, Techstars had to balance the needs of their corporate partners, too.
What happens next?
Techstars is facing very challenging circumstances. In order to stop the decline they are experiencing and rebuild its brand, Techstars must recommit to serving founders and ensure they align the incentives of their team, mentors, and partners around this North Star.
While Techstars made some missteps along the way, I would be remiss if I did not mention their impact throughout the years. Techstars democratized access to capital across the country, supported founders in markets previously not supported, and funded 4,000+ startups in the process.
I’m rooting for them and their portfolio companies to turn it around.
