Don’t Go Dark

I’ve had a couple of situations lately where a portfolio company founder or CEO went dark on me. They just stopped communicating.

Sometimes it takes me a while to notice it. When I do, I usually check in with the person and just ask something like “Hey – I haven’t heard from you in a while, how’s it going?”

Sometimes the response is benign, and all is more or less ok with the company and people in question. Perhaps they’ve just forgotten to update their investors for a while, or it’s been a particularly busy time for some other reason. In those cases, my checkin serves as a gentle reminder.

Other times, as you might expect, it’s more of a doomsday scenario. They went dark because stuff wasn’t working. There was nothing good to tell their investors about, so they just said nothing. It’s been a long time. Now the company is out of money, out of options, and the person just doesn’t know what to do next. “Any ideas?” they ask.

“Not at this point” I think to myself. With no runway left they’re out of cash already and living off the founders credits cards. All the employees are gone. They forgot to update investors along the way, so there’s no way to help at this point except coach them on how to shut down gracefully.

Don’t let this happen to you! Communicate bad news early – you might be surprised at how your investors can jump in and help.

As an example, Techstars now has a large full-time team just working on corporate development and M&A. We’ve completed over 100 M&A transactions, and we probably could have helped create some kind of positive outcome if we only knew you were in trouble earlier.

At Techstars, we’ve put systems in place now to see who we’re not hearing from regularly so that we can be proactive. But most angel and seed investors don’t have systems like this.

When stuff goes badly, don’t go dark. It’s a huge mistake for so many reasons.

This was originally published on David’s blog.




Diversity at Techstars Companies: 2016 Update

Last year Techstars announced our diversity commitment as part of White House Demo Day. As a follow up to that commitment, we are now reporting on our progress and publishing our diversity data annually. During 2016, we’ve tracked participation in our accelerator programs and have made measurable progress to increase participation by women and underrepresented minorities within our applicant pool, mentors, and staff.

Here is a recap of what we are doing to improve inclusive entrepreneurship:

  • We created the Techstars Foundation to improve diversity in tech entrepreneurship worldwide, through grants to mission-driven organizations such as Defy Ventures, Astia, Change Catalyst, Gaza Sky Geeks, and Patriot Boot Camp.
  • We partnered with Chase for Business to survey ~700 startup founders about diversity and inclusion at their startup. The output includes a research report highlighting the data from that survey as well as a website which provides actionable resources startup founders can take to improve diversity at their startup.
  • We’ve trained staff on unconscious bias, are working to offer this training to our portfolio companies, and we’ve implemented processes to ensure that every selection committee includes at least two women.

Our specific diversity commitment last year was to:

Double the number of women in our accelerator program applicant pool and across our mentor network over four years. Track participation in our programs by underrepresented minorities and double that from the baseline over the same time period.

This year will serve as our baseline and we will update these numbers annually. Here’s how we’re doing so far:

2016

2017

2018

2019

Ethnically diverse founders

25%

TBD

TBD

TBD

Female founders/participants

19%

TBD

TBD

TBD

Female mentors

18%

TBD

TBD

TBD

  • Twenty five percent of our US-based founders are ethnically diverse (non-white).
  • Nineteen percent of our founders and program participants are female.
  • For many of our US-based accelerator programs (including Sprint, Retail, Healthcare, IoT and Connection) nearly 20 percent of the companies who applied had at least one female founder.
  • Eighteen percent of our mentors are female and 18 percent are ethnically diverse.
  • For our global Startup Programs, we’ve increased our gender diversity to 33 percent female attendees.
While we are glad to see our efforts are beginning to pay off, we’ve still got a very long way to go. We want to thank those of you who have helped with these efforts over the last year, and who will continue with us on this journey.
Startup Founders: to learn more about how to improve diversity and inclusion at your company, please visit our microsite for specific resources that will help you become a diversity leader.



Rethinking Corporate Innovation at Techstars

At Techstars, we’re building the best global ecosystem for founders to bring new technologies to market. One of the impacts that I think we’ll have a long time is to change the way that corporations engage with startups. We want to help make those engagements effective and efficient for both parties. We do this in a few different ways.

First, we have an internal team of five people that focus on corporate relationships. They’re the folks who do amazing things like BizDevDay at FounderCon, where there were 1500 meetings in a single day between big companies and our portfolio.

They also work on M&A when necessary, and we recently completed our 100th M&A transaction out of the Techstars portfolio. They have deep relationships with most of the important large corporations in our space, and are constantly making connections to Techstars’ companies.

From the large corporations perspective, they might think of this activity as corporate development or “corpdev.” We think of it as leveraging our scale to assist our portfolio of amazing startups.

Second, we partner with large corporations to build accelerators, like Techstars MusicTechstars Mobility or Techstars IoT. In working with so many large corporate partners, we’ve learned that some of them engage with these accelerators with a short term view, and some with a long term view. Let me explain.

When a corporate engages with an accelerator or with startups, their short term view might entail them thinking about which one or two of these companies could “move the needle” for their stock, or fill some current strategic gap. They engage with the accelerator as if their job is to cherrypick. That’s all well and fine and it produces near term results in many cases, but it’s also short term thinking.

Other partners engage with a long term view. They lean in and #givefirst, which may at first feel somewhat alien to them. In this mode, the partner is thinking about how this could impact their business in 5, 10 or 20 years.

They’re thinking about the startup ecosystem they are building around their own company, technology and areas of interest. They’re trying to grow more cherries to pick later. The long term thinkers understand that current opportunities are only a small part of their role in growing an ecosystem around themselves. They lean in long term.

Startups are a long game, not a short one. As our partners actively re-think what corporate innovation means, they’re learning that it’s about both long and short term focus. They’re learning that they need corpdev programs that move the needle now, but they also need to grow the right ecosystems around themselves. And that takes time and patience.

It takes good and helpful behavior around startups with a 20 year view. They are learning to be consistent in their approach to #givefirst. They are learning to leverage startups for innovation. And when they get it, when they start thinking long term in the context of startups… it’s pure magic.

 

This post was originally published on David’s blog

 




Funding and M&A Activity Across the Techstars Ecosystem

Third quarter brought some exciting funding news for Techstars companies!

Congratulations to:

Here are the companies that have recently received significant investments!  

remitly

Remitly (Seattle ‘11), a mobile payments service that enables convenient international money transfers from a customer’s mobile phone in the USA to a mobile phone abroad, secured yet another $38.5M.

pillpack

PillPack (Boston ‘13), an online pharmacy that delivers better care through simple packaging, modern technology and personalized service, raised $31.1M to take on pharmacies.

fullcontact

FullContact (Boulder ‘11), the company that provides a cloud-based contact management solution for businesses, developers and individuals, raised $25M in August.

distilnetworks

Distil Networks (Cloud ‘12), announced a $21M series C. Distil Networks is the global leader in Bot detection and mitigation, offering the first SaaS solution focused on stopping automated attacks.

gospotcheck

GoSpotCheck (Boulder ‘11), the company that supplies brands with real-time insights into their in-store merchandising through a mobile app, raised $16.5M to expand their Denver HQ.

postquantum

Post-Quantum (Barclays UK ‘15), raised a $10.3M series A round in July. Post-Quantum deals with cyber security for today and the post quantum computing future.

promoboxx

Promoboxx (Boston ‘11), is a brand-to-retailer marketing platform that allows brands to launch co-branded, customized online campaigns with their retailers. Promoboxx raised $8.2M series A in September.

codeship

Codeship (Boston ‘13), raised $7M to continue to accelerate their business to reach even larger customers. Codeship helps teams ship better software faster by automating the release process.

truefacet

TrueFacet (Seattle ‘14), is the online jewelry marketplace where you can shop and sell branded jewelry and watches with confidence. They recently announced a $6M series A.

livelike

LiveLike (NYC ‘15), the company that developed a sports viewing platform that leverages VR to bring live stadium experiences to fans’ living rooms, recently raised $5M.

kepler

Kepler (Seattle ‘16), recently raised a $5M seed round to develop and operate a network of 50 nanosatellites to allow customer spacecraft to communicate with each other and the ground in real-time, regardless of their current orbital position.

bitfinder

Bitfinder (R/GA ‘15), the company that built Awair, a device that monitors indoor air quality, analyzes it and provides solutions based on users’ wellness needs like allergy, sleep and productivity, recently raised $4.5M.

livestories

LiveStories (Seattle ‘14), announced a $3M seed round. LiveStories empowers non-technical people with a simple data discovery and presentation tool that allows easy construction of data-rich content, all without writing a single line of code.

bison

Bison (Boston ‘12), a financial technology company delivering software for analyzing private fund data, recently raised a $3M seed round.

screen-shot-2016-10-11-at-3-59-03-pm

Reflect (Seattle ‘16), a data visualization service that is reinventing how companies build and distribute analytics, recently raised a $2.5M seed round.

aire

Aire (Barclays UK ‘14), is a fresh approach to credit scoring for consumers, enabling fair access for those cut out of the credit ecosystem. Aire secured $2M in funding in October.

shyft

Shyft (Seattle ‘16), raised $1.5M in July. Shyft is an app that makes lives easier for retail and service workers around the world, by helping them communicate and manage their work life in one central place.

Don’t miss your chance to join a Techstars accelerator program – Applications close October 15. Apply today.




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.




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