Ask David Cohen: When is the Right Time to Apply to an Accelerator?

We recently held an AMA with Techstars’ Co-CEO, David Cohen, where he answered commonly asked questions from founders about topics such as forming a team, developing an MVP and applying to an accelerator program.

This post is the fifth in a series of five which includes a transcript of David’s answers to these questions in this AMA. To sign up for our next AMA, check out the schedule here!

I am in the middle of building out my prototype and I want to apply to an accelerator. The longer I wait to apply, the more functional my prototype will be. Based on that, should I apply as late as possible? Why or why not?  

My general advice on this is apply as early as you can. Apply the minute that you know you want to. The reason for that is because of the multiple touchpoints and experiences you can have with the selection group that is selecting the companies. I’m part of that group usually later in the process, when we have it down to about 20 or 30 companies that we are looking at for the 10 or so that will get in.

There is a group of people that are going through those applications early, screening them and filtering them. It’s not “yes or no”, it’s, “that’s interesting, I’d like to learn more.”

As you update the application through the application system (F6S), we get those updates and we see the progress. My friend Mark Suster wrote a great blog post a long time ago that I refer to all the time called, Invest in Lines, Not Dots. That means, as investors, you are trying to see progress over time and have multiple experiences with an entrepreneur or with a company before you have to make a decision.

Don’t think of it as a snapshot in time, think of it as a relationship that you build throughout the application process, and apply early.

 

Interested in meeting other entrepreneurs and getting a head start on your own entrepreneurial journey? Check out a Startup Weekend near you or apply to an accelerator program.

At Techstars, we fully believe in the idea that no one is “too far along” for Techstars. Inversely, nothing is too early. Techstars has a program for every step of the entrepreneurial journey – from startup programs like Startup Digest, Startup Week, Startup Weekend and Startup Next to later stage offerings, including the accelerator program and venture capital for add-on funding.




Tech Startups: How to Become a Diversity Leader

Today we are excited to announce the results of our diversity research project with Chase for Business. We surveyed nearly 700 founders of tech startups from around the world to gain insights into the challenges they face when working to build a diverse and inclusive company.

We discovered that founders want to create an inclusive and diverse workforce, but many simply don’t know what to do to build inclusive teams. Our data show what specific actions Diversity Leaders take and how other entrepreneurs can replicate these actions to benefit from the unique perspectives that a diverse workforce can bring to their business.


A few key takeaways:

  • 81 percent of founders say diversity enhances creativity and innovation
  • 67 percent of founders say that diversity improves problem solving
  • 63 percent of founders say that a diverse workforce provides greater access to talent
  • 92 percent of founders are familiar with the term “unconscious bias,” but only 45 percent are taking steps to reduce it
  • Only 23 percent of founders say that a diverse workforce improves financial performance

While founders see advantages to having an inclusive and diverse team, they fail to connect those advantages to improved financial performance. However, research has clearly shown that tech companies led by women are more capital-efficient, achieving 35% higher ROI and 12% higher revenue. When a company commits to creating a diverse workforce, the business is more financially successful.

The study also uncovered that founders fall into three buckets: Diversity Planner (32 percent), Diversity Builder (56 percent), to Diversity Leader (12 percent).

Diversity Leaders take specific steps in five areas to create an inclusive environment: mentoring and advising, hiring practices, professional development, pay and performance, and flexible benefits. Tech startups who are Planners and Builders can follow the actions of Leaders to make progress in these areas.

We didn’t want to conduct another research study that identifies the problem but doesn’t offer actual ways to solve it. We have provided resources on the microsite so that founders can take action. This is by no means a comprehensive list. We know there are many more resources out there – please help us by adding them in the comments or use the Submit a Resource feature on the microsite.

Founders: please visit www.techstars.com/bealeader to learn how to become a Diversity Leader in tech. You can also view our infographic and download the full research report.

Big thanks to our partners Chase for Business, Lawless Research, and NCWIT for their support on this important initiative!




Helping Women in Tech with Betabrand

The Techstars Foundation is proud to announce a partnership with Betabrand, an online clothing community. Betabrand will donate $5 to the Techstars Foundation for each pair of Dress Pant Yoga Pants sold during the month of September. The goal of this campaign is to raise money and awareness for diversity in tech entrepreneurship, and we want you to get involved.

In addition to contributing $5 to the foundation for each pair sold, Betabrand is also offering a Sweepstakes to tech startup founders which includes interviews with Techstars’ Managing Directors, office hours with Techstars’ company founders, and a chance to win passes to Startup Weekends around the world. They’ve also highlighted some amazing open jobs in the startup community.

We often hear from founders that they want to support women and diversity in tech but don’t know how. Here’s your chance! This makes a great gift for you or someone you love. I mean, come on, Dress Yoga Pants!

I want to offer my heartfelt gratitude to the people of Betabrand for all of their generosity and creativity towards this effort. When they approached me with this idea, I was blown away. Betabrand has always spoken to founders, and to see them giving back actively to underrepresented entrepreneurs is just awesome.

Check out this page for more details on this special offer and please share with your favorite female founder! You might even spot some of your favorite Techstars’ founders modeling the pants on that page including Jackie and Andrea from Revolar, Leah from Nexosis, Diana from Indico, Caroline & Christine Stzalka from Itsbyu, Laura Spiekerman from Alloy, and our very own Sarah Bain from Techstars Retail.

Happy shopping!




Ask David Cohen: Forming a Team

We recently held an AMA with Techstars’ Co-CEO, David Cohen, where he answered commonly asked questions from founders about topics such as forming a team, developing an MVP and applying to an accelerator program.

This post is the fourth in a series of five which includes a transcript of David’s answers to these questions in this AMA. To sign up for our next AMA, check out the schedule here!

What is the best place to put one’s idea out there in order to expose it to like-minded entrepreneurs in hopes of forming a team?

I get this question a lot. It’s always the, “I want to find co-founders” or “I’m very business oriented and do not have a technical team” or “how can I find people and get them excited about this?” or the, “Do I need to be super worried about exposing my idea? I saw the Facebook movie and how the idea got stolen and I don’t want that to happen to me.” (Which, by the way, it turned out okay for the people whose idea got stolen in that scenario).

We are all very fearful of this and it’s irrational. The people you are talking to and sharing your ideas with are high-reputation people. Maybe they are investors in the community that depend on their reputation, or even experienced entrepreneurs, versus just any stranger. Getting out there and building relationships with people and being a thought leader in your space is a great way to do it.

Start a blog or some account on your favorite social platform and start talking about your issue.

Being a thought leader attracts like-minded people.

People will then share those posts with people that they know are also interested in the issue. “Hey Mary, maybe you should go join Joe and start a company and do this together.”

It is much easier if you are on the engineering side to find the business help, and it is still, even today, much harder if you are on the business side to find the tech help. The thought leadership aspect is key, as well as just living in the communities where the type of people you are looking for hang out. It could be universities, engineering groups, online forums, etc.

You can share a little bit of your idea, but wait for people to engage with you on the idea and then have more of a one-on-one offline. It is a great way to build real relationships.

Interested in meeting other entrepreneurs and getting a head start on your own entrepreneurial journey? Check out a Startup Weekend near you!

At Techstars, we fully believe in the idea that no one is “too far along” for Techstars. Inversely, nothing is too early. Techstars has a program for every step of the entrepreneurial journey – from startup programs like Startup DigestStartup WeekStartup Weekend and Startup Next to later stage offerings, including the accelerator program and venture capital for add-on funding.




Equity Back Guarantee: Reflections Two Years Later

In 2014, we announced the Equity Back Guarantee (EBG) at Techstars. In a nutshell, anyone who wasn’t satisfied with their accelerator experience and the value we provided was offered the option to take their equity back in exchange for giving us feedback to help us improve.

To us, it felt like an obvious and logical instantiation of #givefirst — a core value at Techstars tied to our belief that startup ecosystems thrive when people prioritize adding value to the whole. Since it’s been about two years, it seemed like a good time to share our reflections on how this has gone so far.

Since we announced the EBG, 326 companies have gone through our accelerator programs. Eight of those (about 2.4%) have invoked the Equity Back Guarantee.

Of the eight, half of the EBG cases were true cases of dissatisfaction with the outcome. All four of these have been at our thematically focused accelerators that are run in partnership with corporations. In these cases, the startups came in expecting to land big business development deals but weren’t able to do so for various reasons. We view this as a legitimate use of the EBG as it is a failure of Techstars to ensure alignment between the corporate partner and that particular startup.

If the sole motivation for participation is an expectation of a business deal with a corporate partner, it may not be the right fit. We now communicate that founders applying to a accelerator program should do so with the goal of growing their company in multiple powerful ways – including, but not just limited to, business development. Large companies sometimes move slowly and a result –  strategic partnerships take time to develop, even with the luxury of direct relationships with key corporate executives.

What we’ve learned from this is to set better expectations with founders up front and let them know that while they will be able to establish meaningful relationships with corporate partners, there’s no guarantee of a business development deal in any specific timeframe.

In the other four cases, the companies asked for equity back because legally they were allowed to do so. In other words, based on their feedback, these four were actually completely satisfied with Techstars. We realized that three of these four companies went into the accelerator planning in advance to pay less. For these three, we viewed it as a failure of ours to set proper expectations up front. They had misunderstood the equity back guarantee as “pay what you want.” In response to this, we’ve been careful to make sure people have appropriate expectations and understand that the EBG is recourse if they feel that the Techstars experience didn’t meet those expectations.  

In only one of these four cases, we actually felt as if we had been wronged. That particular company actually understood the intent, and didn’t care. They were attempting to optimize their position based solely on advice from their lawyer. We viewed that one case as an extreme anomaly and a failure in our selection process. Because we are focused primarily on the people, their integrity is something we clearly misjudged in that single case.

Another fascinating element to the EBG is that companies may not want to execute on it for fear of damaging their reputation in the network.

We have a deep commitment to not penalize a company that executes the EBG.

We make no attempt to talk them out of it. We simply listen to the feedback and execute on their request. Our intention is that the companies who have exercised the EBG still feel supported by the network and we take care to ensure this is the case.

With a 98% non-redemption rate, we view the EBG as a huge success. It’s part of our ethos at Techstars.

We’re not interested in having equity that founders don’t feel we’ve earned.

We have a strong desire to continually improve, and the data we get from the EBG helps us do that. It also ensures that everyone who is an alumni of Techstars feels like it was a fair and valuable exchange.
We plan to keep the Equity Back Guarantee in place as we continue to grow and believe it will be continue to be an important way to continue to monitor and improve our own performance.




Ask David Cohen: Finding a Developer

We recently held an AMA with Techstars’ Co-CEO, David Cohen, where he answered commonly asked questions from founders about topics such as forming a team, developing an MVP and applying to an accelerator program.

This post is the third in a series of five which includes a transcript of David’s answers to these questions in this AMA. To sign up for our next AMA, check out the schedule here!

Can you offer any tips on selecting a developer or development team?

If I’m an entrepreneur and I have an idea, and I don’t have the development talent around me but I need to find a developer, I would do my selection just like I would with hiring an employee. I would first select on integrity. Is this a person that has high value and is well respected in the community? Secondly, I would select based on their motivation. Do they really want to do this? Is this the team that really wants to go build this thing? Are they excited about it? Are they motivated to change the world in this way? It’s going to be hard.

Somewhere down the line, I look for talent. That would probably be next after motivation and integrity. I think talent without integrity doesn’t matter, and talent without motivation doesn’t matter. Put integrity and motivation first and then look for the talent – the ability to actually do the task or even just the potential to learn it. I think the best developers can learn any language; if they are a good developer, they can learn whatever. But the raw talent, the ability to learn it and do it and demonstrate the ability is helpful.

Later on, experience is the next factor. Having experience in that specific domain is probably the last thing I look for, and by the way, this is true for any employee. You pick developers the same way. Motivation matters a lot because developers right now are like the investors. They are the scarce resource, they are the ones investing in your startup, so I really want to know where they are coming from and why they care about my idea. Hang out in forums and groups where people are passionate about the same things you are. That is where you are going to find the people you are going to want to work with.   

 

Interested in meeting other entrepreneurs and getting a head start on your own entrepreneurial journey? Check out a Startup Weekend near you or apply to an accelerator program.

 

At Techstars, we fully believe in the idea that no one is “too far along” for Techstars. Inversely, nothing is too early. Techstars has a program for every step of the entrepreneurial journey – from startup programs like Startup DigestStartup WeekStartup Weekend and Startup Next to later stage offerings, including the accelerator program and venture capital for add-on funding.




Ask David Cohen: Building a Technical Team

We recently held an AMA with Techstars’ Co-CEO, David Cohen, where he answered commonly asked questions from founders about topics such as forming a team, developing an MVP, and applying to an accelerator program.

This post is the second in a series of five which includes a transcript of David’s answers to these questions in this AMA. To sign up for our next AMA, check out the schedule here!


My co-founder and I are not technical so we used an outside company to develop our MVP. At what point should we start looking to build our technical team?

The analogy I would give you is, if you are a software company, it’s probably pretty important that you have software expertise. If you’re not a software company, and you maybe just have some software that is not absolutely core to what you do, (maybe you’re an investor like us and you have software, but it’s not the central thing that you do for people), then maybe you don’t need to have a full-time engineer, you could outsource that. But, if you are an auto repair shop, and people are bringing their cars to you to be fixed, I don’t think that I would want to outsource my mechanics, because that is my core competency as an auto repair shop. I want total control over it and I want to be the best in the world.

If you’re a software company, I don’t see how you could be the best in the world by outsourcing it to somebody else. Too expensive, not enough control, not enough ownership, hard to get the resources on what you want when you want it, etc. So my answer is, the earlier the better. It’s obviously always a big challenge – people will say, well we don’t have the funding to hire the technical resources, we’ve found an outside group to develop the MVP for a little bit of equity, then great! You’re being an entrepreneur, you’re figuring it out, but if this is your core competency, bring it in-house as soon as possible.

Interested in meeting other entrepreneurs and getting a head start on your own entrepreneurial journey? Check out a Startup Weekend near you or apply to an accelerator program.

At Techstars, we fully believe in the idea that no one is “too far along” for Techstars. Inversely, nothing is too early. Techstars has a program for every step of the entrepreneurial journey – from startup programs like Startup DigestStartup WeekStartup Weekend and Startup Next to later stage offerings, including the accelerator program and venture capital for add-on funding.




Ask David Cohen: Developing an MVP and Reaching Investors

We recently held an AMA with Techstars’ Co-CEO, David Cohen, where he answered commonly asked questions from founders about topics such as forming a team, developing an MVP, and applying to an accelerator program.

This post is the first in a series of five which includes a transcript of David’s answers to these questions in this AMA. To sign up for our next AMA, check out the schedule here!


Any advice to founders who need more resources to develop an MVP or a presentable prototype? What’s the best method of getting investors to hear out the idea/plan when you don’t know anyone in the community?

These are kind of different questions so I am going to go at them separately. I’ll tell you a quick story of a company called Everlater that sold to MapQuest, AOL and came through Techstars. When I first met Nate and Natty, they were Wall Street types and loved to travel. We funded them, but we only funded them after watching them try to learn how to program.

They were so passionate about this idea coming out of their minds into the world that they actually taught themselves how to code – they were terrible at it, not very good at all. But later on, they got better, but it was still a crappy prototype and a crappy MVP. So step one is, having something is better than nothing.

If you can’t find somebody to do it, my question is, why can’t you do it? Do you think that writing a little software code is something that you have no ability to learn? It tells me something about you, that you are not willing to try. You could find a friend who does know how to program to spend a couple hours with you and show you how to get going.

You could say look, this is what I am talking about, it doesn’t work yet, but it’s what I’m talking about.

I believe great entrepreneurs do stuff.

If you can’t do that and you are allergic to keyboards and computers and you’re just never going to code, that’s cool too. Some of these languages, by the way, are very easy to learn now, it’s not like learning a foreign language, you can get a lot of help from the editor, and there are various simple languages out there that you can learn how to prototype things quickly.

There are lots of coding classes available online, so my first question is, why aren’t you doing that? If you can’t get somebody in the world who has those skills excited enough about what you are doing, or you can’t make friends with somebody who can help you with that, that is also a red flag for me as an investor.

The answer to the question is like anything else, just do it. That’s why it is Nike’s slogan, it’s so great and really the easy answer to a lot of things. Plus, I’m an early stage investor, I don’t care if the prototype is presentable, it doesn’t have to blow me away. You just have to start the meeting and say look, I hacked this together myself, we need funding to hire engineers and obviously the user experience is terrible. You know it is terrible, but that’s okay. You’re self-aware, it doesn’t have to be beautiful and great.

I think doing attracts investors. Talking about doing makes me think maybe you’re not an entrepreneur.

For the second part of the question, I would take a quality over quantity approach. I would find someone who does know the investors that you are targeting and I would figure out how to spend time with them. For example, I would go to someone that they funded or someone that they have worked with and mentored before and say, will you help me with this? They are likely more available than the investor and I would use them as a way to create an introduction to the investor.

I would also suggest you read my blog post on DavidGCohen.com called Small Asks First. It’s about the idea of not over-asking, which is really important in entrepreneurship. You are trying to get to a resource, it is very busy, so get an introduction from somebody they know – it’s not that hard, and just ask them for something small.

Let me give you an example of something big – lunch. Lunch is very big – you’re asking them to go spend time with somebody they don’t know for an hour, which is an awkward situation, especially if they’re an introvert like I am. That’s a big ask. I know it feels small to you but it’s a really big ask to me. Coffee – huge ask. I have another blog post called Coffee or Lunch? that I wrote on this topic. They would have to go out of the office, meet you somewhere, and the biggest thing is, I don’t know you… it’s a big ask for a first ask.

Here’s a small ask – send me a paragraph or two of why I can be helpful to you, and the one really simple thing I can do to be helpful to you. I have another blog post that is called The Perfect Email. Somebody wrote me out of the blue, not even introduced, with enough context that I thought it was the best email I ever read and so I reacted to it. I ended up having an exchange of dialogue with that person; I even blogged about it. I don’t know what happened there, probably nothing huge, but hopefully I was helpful in some way.

I think the context of why you’re reaching out to me and asking for something that is easy for me to do is great, because going to have lunch is actually not easy to do – I’m busy, I’m introverted, etc. What is easy is asking me to click on a link and tell you what I think of the messaging on your website, the primary tag line or whatever. If I don’t respond to that, I’m just an ass. That takes ten seconds for me to do. It’s a small ask, it creates engagement, I can just click on the link, see what you’re doing, have to think about it for a second and then respond. Now, you’re actually starting a dialogue by making a small ask of something that is very easy for that investor to do. That is a great way to build a relationship and you go from there. You can do that at scale to figure out who is interested and engage more with those people.

Eventually, you’ll end up having lunch and a meeting.

Interested in meeting other entrepreneurs and getting a head start on your own entrepreneurial journey? Check out a Startup Weekend near you or apply to an accelerator program.

At Techstars, we fully believe in the idea that no one is “too far along” for Techstars. Inversely, nothing is too early. Techstars has a program for every step of the entrepreneurial journey – from startup programs like Startup DigestStartup WeekStartup Weekend and Startup Next to later stage offerings, including the accelerator program and venture capital for add-on funding.




Funding and M&A Activity Across the Techstars Ecosystem

The past three months have seen some exciting funding news for Techstars companies! Congratulations to:

Also, a big shout out to the Techstars Ventures-backed Twilio on its IPO in June!

Here are the companies that have recently received investments!  

 

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Remitly (Seattle ‘11), a mobile payments service that enables consumers to make person-to-person international money transfers from the U.S. and Canada, secured $38.5M in Series C funding last April.

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Cloudability (Cloud ‘12), a data-driven cloud cost management firm, raised $24M in a Series B funding round earlier this month to continue to scale.

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Outreach (Seattle ‘11), recently raised $17.5M in Series B to expand their engineering team. Outreach builds robust communication software for Sales Development Reps, Account Executives and Success Managers.

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Bench (NYC ‘12), a modern, online bookkeeping service for independent businesses, announced a $16M ($20M CDN) Series B round that will go toward product enhancements.

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Keen.io (Cloud ‘12), is a custom analytics backend for modern developers. Keen.io secured $14.7M in Series B financing to accelerate their global growth in the enterprise.

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Lystable (London ‘14), recently closed an $11M Series A round. Lystable is the platform for the lean enterprise, helping large organizations manage their suppliers and external resources.

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Ionic (Cloud ‘13), is a powerful open source UI library and toolchain built with open web technologies that enables web developers to build high quality mobile apps on multiple platforms with one single code base. Ionic announced an $8.5M Series A funding round in late April.

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Testlio (Austin ‘13), a full-service mobile app testing solution, received $6.25M in Series A funding in mid April to continue to grow and evolve as a company.

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Convey (Austin ‘14), is the first concierge solution focused exclusively on customer delivery. Convey recently announced that they raised $4.5M in Series A funding to invest in their engineering work.

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Notion (Boulder ‘14), raised $3.2M in additional funding early this month. Notion is a wireless home monitoring system that can detect things like when doors open, your home’s temperature and even if there is a water leak.

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Homemade (NYC ‘15), raised $2.1M in seed funding in early April. Homemade is a platform for cooks to share their meals and story with the community.

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Netra (Boston ‘15), raised $1.85M in early June. Netra is focused on helping enterprises regain control over the chaos of imagery to better understand consumers’ intent and preference – and help them find exactly what they’re looking for.

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ilos (Cloud ‘16), the company that allows businesses to communicate with customers and team members by instantly recording and sharing videos, raised $1.5M in its first formal round of financing.

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Preply (Berlin ‘15), is an online platform for finding private tutors in your city or by skype for a variety of subjects. They recently announced a $1.3M seed round in early June.

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Flip (NYC ‘15), recently raised $1.2M in seed funding. Flip simplifies the experience of renting housing by turning leases into liquid assets that people can buy and sell from one another.

 




The Twenty Minute VC with David Cohen: Investing in Uber, Twilio and SendGrid

I love the 20 Minute VC podcast. It’s the perfect amount of time and Harry Stebbings does a great job attracting interesting guests and asking them the right questions. I was honored when asked to be on the show, here’s that episode.

Harry asks me questions like:

  • How did I make the transition from Founder to VC with Techstars and Fund I?
  • Fund I is one of the most successful funds in history; what was the structure with Fund I? Why did you choose a $5m fund size? How did you decide initial to follow on ratio?
  • Why were you so valuation sensitive with Fund I? Why were you so rigid on a consistent check size on Fund I?
  • Why did you decide to expand from being a solo GP fund? What are the challenges and complexities of fund scaling and how did you approach this?
  • What do you think about uncapped notes?
  • Why do you like big boring companies?
  • How did you meet Ryan Graves @ Uber and how did the Uber investment come about? (even more about that here)
  • Where does David still see inefficiencies in the current venture model?


I hope you enjoy it. I had fun doing the interview.

The Twenty Minute VC takes you inside the world of Venture Capital, Startup Funding and The Pitch. It helps you discover how you can attain funding for your business by listening to what the most prominent investors are directly looking for in startups, providing easily actionable tips and tricks that can be put in place to increase your chances of getting funded.




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