The Exciting New Startup Accelerator Model
03 Oct 2014
As an alumni of the Techstars Boulder 2010 program (called GearBox at the time) and a current participant in the Techstars Disney Accelerator 2014 program I was excited to hear about the new equity-back guarantee that Techstars is going to be offering to all participants starting in 2015. For my co-founder, Adam Wilson, and I the terms presented by Techstars back in 2010 of 6% equity and $6k per founder ($12k between the two of us) didn't give us any hesitation. At the time we were living on credit cards and a small loan my dad had given us to get the company started. We had little knowledge of growing a startup so even though only around 30 companies had gone through Techstars when we originally applied and it wasn't nearly as proven as it is now the value was still clear to us. The second we heard that we were accepted we said yes.
For us, the results of the 2010 program were immediate. Right after demo day one of our lead mentors in the program who we had gotten to know very well, Paul Berberian, joined our company as an experienced CEO. We didn't really think much about whether or not we could build the company without him because we knew we wanted to grow fast and we would need seasoned expertise if that was going to happen. We also closed a $50k convertible debt round while we were still in the program (this was before Techstars started offering $100k of convertible debt) and closed a $1.1m Series A round about a month after demo day. This allowed us to start hiring more people and really get things going! I can confidently say that we wouldn't be anywhere close to where we are today without Techstars.
Since 2010 I have mentored many startups who either ask about Techstars out of curiosity or because they are thinking about applying. The question they all ask me is - is giving up the equity is worth it? Of course I say yes but these days with all of the other startup accelerators, Kickstarter, Indigogo, startup events to meet mentors and investors at, ect there are so many options that I can understand how Techstars could seem like a risk. What if they gave up 6% and didn't find value in the program? Now they are out 6%. This is especially true for larger companies wondering if they could also get value out of Techstars. We decided to apply to the Techstars Disney Accelerator after already raising $32m and having ~45 employees in the company so giving up any equity at all was obviously a huge decision. The equity-back guarantee would have saved us a lot of stress! At the moment we're still in the middle of the program so you'll have to check back to see where we ended up but all signs are pointing in the direction of high-value and we have certainly learned a tremendous amount!
If you want to know more about Techstars you can check them out here.
CTO / Co-Founder