Techstars is one of the oldest and most sought after accelerators, providing €15,000 in seed funding, intensive mentorship, and a great network of mentors and alumni for 7-10% equity. SendGrid, Digital Ocean, FullContact, Moveline, PivotDesk are some of the program’s alumni.
However startups don’t easily get accepted to one of its 13 weeks programs in Boulder (Colorado, US), New York City, Boston, Seattle, San Antonio, Austin, Chicago or London. Well, at How to Web 2014 we asked Jens Lapinski, Managing Director at Techstars why are they so selective.
Jens is currently responsible for selecting startups for investment, while providing crucial support for the program’s operations. Before joining Techstars, Jens was a partner at Forward Labs, a London-based startup studio focused on building profitable startups at high speed using lean startup principles.
How to Web: Techstars is one of the programs established before the boom in accelerators around Europe and the world. How has the tech ecosystem changes since then?
Jens Lapinski: Tech ecosystem has matured significantly. There is so much more knowledge that is easily accessible via the web. Because of Amazon Web Services and all the services that followed, you can now easily build apps. Because of Google, Facebook and others, you easily advertise. Because of the app stores, you can get global distribution to one billion consumers. The changes are profound.
What differences are there in the way startups used to obtain financing and the way they do it now? Is it easier or has it become more difficult?
It has become so much easier. The angels are so much more experienced. There are many more of them. Tax breaks have made investing so much more attractive. There are many more seed funds. There is a lot of transparency. There are Accelerators, etc, so many ways you can raise funding now that didn’t exist ten years ago.
What changed in the way you evaluate startups from the early days of Techstars and until now? Are there any differences between the way it’s done in the US and the way it’s done in London?
We have now run 40 programs. Of course you become more sophisticated with time. As do the entrepreneurs, by the way. We now see many more experienced entrepreneurs. There are no significant differences how we evaluate companies.
How have you managed to become one of the most coveted acceleration programs? What do you do differently?
We were one of the first. We have been doing it for a long time. Our experience and the network of mentors, investors and founders is huge.
What is your strategy for selecting startups? Can you share some specifics?
There are five things we care about: Team. Team. Team. Market. Idea. When you do early stage investing, it really boils down to the founders, the market and how they are tackling it.
Training programs are multiplying by the dozens around Europe. With all the resources available, what additional benefits does an acceleration program offer?
Access to a vast network of mentors, investors and entrepreneurs. Techstars companies have thousands of people on their side. You can get this via training alone.
Techstars selects startups that have already received funding or have been through previous acceleration programs. What is the motivation behind this?
We pick teams. Sometimes they come with funding. Sometimes they don’t. We don’t really mind how much they have.
Do demo days still work? What is your experience?
Yes. They do for us.
What is a program manager’s job and what are the biggest satisfaction you get from doing what you do?
Seeing entrepreneurs win is the biggest satisfaction.
Does Techstars plan to innovate in regards to its business model? How long do you believe the current model will continue to perform as it does right now?
We provide extensive additional services to our companies beyond cash. In that sense, there already has been a lot of innovation. By partnering with corporates in some of our programs, we can unlock yet further value. I think when you look at the VC world, then you will notice that many firms are trying to compete strongly using value add.
I think you will see this is a trend that is only intensifying as firms are competing for deals. As our global network grows, the value of it will increase automatically, which is great news for our companies.