This post was inspired by Fred Wilson’s article on ycombinator, "Best deal in startup land".
Drinking a beer at Flat Top Johnny’s after the TechStars’ Investor Day, I couldn’t help but laugh. We were celebrating the culmination of three months of intensive startup bootcamp with David Cohen, Brad Feld, Rich Miner, Bob Frankston, Shawn Broderick, and many other TechStars’ mentors. How could a small team from Maine be so fortunate to be in the company of some of the smartest people in the startup world?
AccelGolf is a TechStars Boston 2009 company. We were also a pain in the ass during the acceptance process. First, we poked at the term sheet (largely non-negotiable), and then continued to delay the decision as we did our diligence—we were confident that nothing could be as good as TechStars sounded.
We couldn’t have been more wrong.
For those that don’t know who or what TechStars is, here is the synopsis from their website:
TechStars is a mentorship-driven seed stage investment fund. Each year we run a summer-long program in Boulder, Colorado and Cambridge, Massachusetts. We’re very selective – each year hundreds of companies apply to the program and we only take about ten per city. These companies get up to $18,000 in seed funding, a summer of intensive top-notch mentorship, and the chance to pitch to angel investors and venture capitalists at the end of the summer.
Some of the questions and reactions that emerged from our research follow:
"We have advisors, and we can network"
TechStars surrounds you with almost seventy mentors who’ve very likely made the same mistakes (probably more than once), eight other teams that will be facing the same struggles, and direct integration into a tight-knit startup community with one the highest concentrations of motivated, intelligent people in the world.
The mentors have built and funded insanely successful companies, but more importantly, they’ve failed. Between them, they’ve failed A LOT. When you can reach someone who has learned the hard way, you don’t have to.
Starting the first day of the program, TechStars pairs you with mentors so you can build strong relationships. This is, in some sense, stacking the cards; the majority of the mentors also have the ability to invest as angels.
Fundraising as a first-time entrepreneur is seemingly impossible, and yet 70% of TechStars’ companies are successful at raising early seed-stage capital. Why is this? In addition to the mentor connections, TechStars’ companies have been through several stages of due diligence. First, they made the cut (less than 4% are chosen). Second, they lasted the three months and produced something meaningful. Third, they are focused on the things most contributory to the success of an early-stage startup.
"Sounds like Road Rules/Real World"
We assumed that since the mentors and investors would naturally gravitate to the most exciting companies, that there would be an inherent competitiveness. This couldn’t be further from the truth.
Entrepreneurship is an experience of ups and downs. The three months of TechStars amplifies these ups and downs. The people around you are experiencing the SAME emotions and challenges. No one understands what you’re going through like them. TechStars has existed for three years now, almost forty companies, all just an email or phone call away.
I’ve never met a successful entrepreneur that didn’t have an almost divine dedication to success. That said, TechStars steps that up. By participating, you’re making a vow to your investors, mentors, and peer companies that you’ll succeed. If you want others to have the same opportunities you’ve had, work harder. In addition to being held accountable for financial returns, you’re now responsible for building the TechStars reputation, and justifying your acceptance into this program.
"We don’t want to lose control"
We were excited about the mentorship, but hesitant about how heavy-handed the advice would be given. Again, this is almost laughable now. Another TechStars tagline: "It’s your company". No one in TechStars tells you how to run your company. In fact, if Shawn / David didn’t have faith in your ability to build a business by making the right choices, they wouldn’t have chosen your company.
"Ask three mentors the same question, and you’ll receive four different answers." In soliciting feedback from so many smart people, it is requisite to weigh the data points of the mentors and make decisions. The key is to have drive and clarity of vision, so that you can weigh different points of advice and not get discouraged.
"We work hard"
I was worried that the meetings, sessions, and work habits of other teams would break our flow. Our team works hard. When we got to Cambridge, we learned another TechStars motto, "Do more faster". I can’t count the times we walked into the office and woke Stephen (HaveMyShift) up sleeping on the futon, or caught Ajay (Sensobi) in on a Sunday evening. Its your duty to make the most of the three months.
"I’ve read VentureHacks et al"
I read…a lot. There are some great blogs/books on startups, but nothing compares to having someone who has been there on the other line when you need it. An example: early-stage fundraising is literally an art, and I cannot express how much I’ve learned from Shawn, Brad, and the other mentors, and even our peers, including Laura (oneforty), who raised at the beginning of the program.
"Why not ycombinator?"
Someone early said: "If you want to build cool technologies, go to YC; if you want to build big businesses, go to TechStars." I don’t know if the former is true, but the latter absolutely is. TechStars provides mentorship, integration into an incredible network, and a certain level of credibility that mitigates a tremendous amount of the difficulty in building an early-stage startup. TechStars doesn’t just build cool technologies, they build world-class leaders who will build big companies over and over.
Thank you TechStars.