Ask David Cohen: Building a Technical Team

We recently held an AMA with Techstars’ Managing Partner, 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.

We believe 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.




Ask David Cohen: Developing an MVP and Reaching Investors

We recently held an AMA with Techstars’ Managing Partner, 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 believe that no one is “too far along” for Techstars. Conversely, 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.




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.




Founders: Please Participate in Techstars’ Research Study

Techstars is committed to providing the best support for founders around the globe. As part of this effort, we are partnering with Chase Bank to understand the challenges facing startup founders today, including fundraising, hiring/recruiting, diversity, market traction, etc.

Together with Chase, we are conducting a global research study to benchmark the current state of challenges facing startup founders. The findings of this research will be used to provide entrepreneurs with actionable steps to solve these challenges.

To complete this research, we invite founders to take part by completing our survey. The survey takes approximately 10-12 minutes.

As a thank you for your time and valuable insights, you may enter a drawing for a chance to win a $1,000 Visa gift card.

Please click on this link to begin the survey.

 

Thank you for your support!




Techstars Ventures Announces Investment in ConnXus

We’re proud to be an investor in ConnXus, a supplier diversity technology platform. Techstars Ventures led the $5M financing in ConnXus, with participation from Serious Change L.P., Impact America Fund and The Social Entrepreneurs’ Fund (TSEF).

CEO Rod Robinson founded ConnXus as a result of his personal experience and frustration with the complexities associated with locating qualified diverse suppliers, tracking spending, tracking diversity certifications, and reporting reliable results in accordance with corporate and government mandates.  ConnXus now solves this problem with its simple to use, cloud-based, technology platform.  

We made a seed investment in ConnXus last year, and when Techstars launched several internal diversity initiatives – including the Techstars Foundation – we invited Rod to join the advisory board given his deep domain expertise. Rod has been a huge help to the Foundation. It’s a classic #givefirst story of Rod helping out with the Foundation that enabled us to get to know him better and ultimately, led us to make a larger investment in ConnXus.

Not only does ConnXus align with our initiatives to serve high-performing, emerging technology companies, but it has created innovative software that directly improves diversity in the supply chain for startups and corporations.

Techstars Ventures is the venture capital arm of Techstars with $265 million under management. We primarily co-invest alongside venture capital and angel communities in Techstars accelerator program graduates, new companies started by Techstars alumni, and companies formed by Techstars mentors.

Welcome, ConnXus, to the Techstars family!




Book Profits to be Donated to the Techstars Foundation

Today we’d like to announce that all royalties from the sale of the books Do More Faster and No Vision All Drive will now go directly to the Techstars Foundation.

The Techstars Foundation is a non-profit created to improve diversity in technology entrepreneurship by providing opportunities for underrepresented entrepreneurs through grants, scholarships, and sponsorships.

You can buy Do More Faster on Amazon here and No Vision All Drive here. Thank you in advance for your support!

About the Books

Do More Faster: Lessons to Accelerate Your Startup

Do More Faster is a collection of advice that comes from individuals who have passed through, or are part of, Techstars’ accelerator programs. Each vignette is an exploration of information often heard during the Techstars program and provides practical insights into early stage entrepreneurship. While you’ll ultimately have to make your own decisions about what’s right for your business, Do More Faster can get your entrepreneurial endeavor headed in the right direction. Buy Now.

No Vision All Drive: Memoirs of an Entrepreneur
In 1993, David Cohen and David Brown founded their first company, Pinpoint Technologies, which grew from a basement startup to a successful multinational company with $50 million in annual sales and over 250 employees. Chronicling the story of that company from its beginnings up to 2003, when it was sold to ZOLL, and beyond, No Vision All Drive is the story of that company and the people who worked there. This book is not about business; it is about people. Buy Now.




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 companies below that have recently received investments!  

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datarobot DataRobot (Cloud ‘13), the Boston-based company that brings machine learning and data-science tools to businesses, raised $33M in a Series B round in February.
Latch_Logo_300x300-02 Latch (R/GA ’15), is the first smart access system that works for your apartment, your office and your home. Latch recently raised $10.5M in a Series A round led by Lux Capital. 
Screenshot_2015-02-02_06.54.56 StatMuse (Disney ’15), is an artificial intelligence platform to help sports fans explore data using simple, natural language. StatMuse received $10M in a Series A round in late January.
logo Wunder (Boulder ’14), the company that provides the solar expertise and partnerships necessary to make investing in, diversifying, and optimizing a solar portfolio delightfully simple, recently raised $3.6M in a new round of financing.
twittericon Naritiv (Disney ’14), announced a $3M Series A round led by Third Wave Digital in February. Naritiv is the platform that connects brands and advertisers with influencers on Snapchat  
DOPAY_LOCKUP_WHITEONPURPLE dopay (Barclays London ’14), the SaaS solution that provides payroll services to both banked and unbanked workers, recently announced a $2.4M pre-Series A round.
GreatHorn-Owl_(logo_for_print) GreatHorn (NYC ‘15), is a cloud security platform that helps detect and prevent spear phishing and credential theft attacks in realtime. GreatHorn announced a $2.25M seed funding round this past March. 
connect_infiniscene Infiniscene (Chicago ’15) recently raised $1.8M to scale-up and improve their existing platform. Infiniscene is a broadcast studio in the cloud that empowers gamers to easily create live broadcasts from their browser. 
Screen Shot 2016-04-07 at 12.54.05 PM eRated (London ‘14), creates a single identity for e-commerce sites, allowing online buyers and sellers to utilize their already existing reputation everywhere they go. eRated raised $1.7M in late January.
ChainalysisLogo2 Chainalysis (Barclays NYC ’15) has raised $1.6M in funding. Chainalysis specializes in countering money laundering and fraud in the digital currency industry. 
logo-square Gorgias (NYC ‘15), the automated helpdesk enabling companies to respond faster to customers, recently raised $1.5M.
Tenacity (Sprint ’14), is a scientific cloud application to engage, retain and optimize your contact center workforce. The company raised $1.5M in funding this past February.
Screen Shot 2016-04-07 at 12.57.05 PM Socedo (Microsoft ‘12), raised $1.5M earlier this year. Socedo is an automated social media lead generation tool.
logo Datapath.io (Berlin ‘15) raised $1.1M this past February. Datapath.io is a network performance management solution.
Screen Shot 2016-04-07 at 1.00.10 PM DataCamp (NYC ‘15) is an online Data Science school that uses video lessons and coding challenges. DataCamp recently announced that they secured another $1M in funding.

 




How to Raise a Series A Round

One of the questions I get asked regularly by founders is what they have to do to raise a Series A round of investment in the $3M-$10M range. I always encourage them to consider applying to an accelerator program since one third of all Series A rounds in 2015 were in companies that graduated from accelerators. But what about the companies that don’t get accepted into accelerator programs? The acceptance rate is fairly low (Techstars accepts 1% of all applicants), so startups should have a backup plan when it comes to securing Series A.

According to PitchBook, early-stage VCs may only look to top-tier accelerators for their pipeline of Series A-worthy prospects. With the amount of hands-on time these alums receive from mentors, founders, and other great entrepreneurial minds, it makes sense to look more closely at these startups when investing.

So your company missed the cut when applying to an accelerator program – how can your company attract more VC eyes?

Leverage Your Network

When fundraising, your network is critical whether you went through an accelerator or not. Surrounding yourself with the people who have done it right, who know the game well, and can give you the right tips is key to your company’s success in fundraising.

Recognize that there are an enormous number of companies being created each year and ultimately many of them are competing for the same Series A money. Techstars sees tens of thousands of startups applying to our programs each year, and we only fund about 250 at the seed level annually. Of those 250, about half go on to raise Series A rounds.

One reason those 125 or so companies are able to raise Series A rounds is due to tapping their networks early in their companies’ lifecycle. I see a lot of early-stage companies meeting with later stage investors well in advance of being in the market for a Series A round. They build relationships early, maintain those relationships, and knock when the time is right.

The market is currently flooded with seed capital, but there is no more Series A capital than there has been over recent years. So start early, and build genuine relationships before you start your Series A tour. Those in top tier accelerators may have an unfair advantage in that regard, but you can manufacture a strong network and book those early meetings as well.

Extend Your Network

The broader and more global your network is, the easier time you’ll have leveraging your progress and credibility in order to manufacture meetings. This broad network comes easier to companies that can go through an accelerator, as you connect with other in-program companies, investors and mentors, but how can you build a larger network organically?

You may currently have a small network, but growing that network has become easier with the use of social tools. LinkedIn, Conspire, even Facebook and Twitter allow you to grab branches that may have previously seemed out of reach.

Those LinkedIn connections, friends-of-friends, previous coworkers you haven’t spoken to in years, are all at your disposal. They may not be the VC you’d like to invest in your company, but they may be able to make an introduction or give you tips on how to get your foot in the door. You’ll never know until you ask.

Being Series A Ready

I’m often asked what it takes to be “Series A ready” in terms of metrics, progress, and traction. Unfortunately, there’s no easy answer. Series A investments are competitive right now, and the smartest VCs I know are still willing to take a chance before there’s any concrete proof.

What is necessary is conviction on the part of the investor. So think of traction as often necessary but generally insufficient evidence to help generate conviction. At least as important is helping the investor build conviction through a series of meaningful interactions over time.

Fundraising Lessons

Having recently raised $150M for institutional investors, I heard many people say no, and you will too. The key is to take as many meetings as possible. Build those relationships early. Maintain those relationships. Leverage angel and micro-VC connections before even thinking of pitching them.

When fundraising, your network is critical. Leveraging it early and often is the key. Don’t make the mistake of waiting until you need money to engage sources of capital. If you’re in a squeeze for capital and you have a solid, mutually beneficial, relationship with a VC, your chances of raising will increase dramatically.

This article was originally published in Fortune.

 




Funding and M&A Activity Across the Techstars Ecosystem

The start of 2016 has already seen some notable funding news for Techstars alumni.

Congratulations to SimpleRelevance (Chicago ‘13) acquired by Rise Interactive.

Also, a big high five to the Techstars companies below that have recently received investments!  

This brings us to a total of 90% of Techstars companies active or acquired and over $2B raised by our accelerator companies. 

  Placester (Boston ‘11), is a real estate advertising service that helps real estate agents and brokers market themselves better. Placester recently raised $27M in a Series C round.
 Screen Shot 2016-01-19 at 1.13.58 PM Bluecore (NYC ’13), is a marketing automation solution for ecommerce brands. Bluecore received $21M in a Series B round led by Georgian Partners in December.
 Degreed Degreed (Kaplan ‘13), the company that scores and organizes users formal and informal education to unlock employment and learning opportunities, recently raised $21M in Series B.
 Nestio Nestio (NYC ‘11), announced an $8M Series A round in December. Nestio is a leasing and marketing platform for residential landlords.  
 Screen Shot 2016-01-19 at 1.09.37 PM Bevi (Boston ‘14), the Boston-based company that provides smart beverage machines, recently announced a $6.5M Series A round.
 app_icon Revolar (Boulder ‘15), is a company that developed a wearable with the sole purpose to help keep you safe. Revolar announced a $3M seed financing round in late 2015.
 logo_carré Streamroot (Boston ’14) is a video streaming startup that raised $2.5M in a recent funding round. Streamroot cuts bandwidth costs for online broadcasters through its peer-to-peer video delivery solution.
 codeship_logo_large Codeship (Boston ‘13) has raised another $1.5M in funding. Codeship automates the process of testing and releasing updates to software apps.
g8b7lJOQ AdHawk (Boulder ‘15), the company that aggregates digital marketing campaigns across platforms and makes optimization recommendations, recently raised $1.4M.
 400x400pixel MetricStory (Austin ’15), is a company that automates the entire process of setting up high value web analytics. The company raised $1.4M in funding this past December.
 Slash-Icon-256-Centered Slash (NYC ‘15), the New York based company that developed a keyboard app that lets users share rich media in mobile messaging without opening a separate app, has recently raised $1.3M in funding.  
 LaunchIcon_512x512 Sundar (Boston ‘14), a company that aims to redefine the apparel and design industries through a curated digital platform for materials discovery and supplier sourcing, recently raised $1.3M in funding.
 InnervateLogoSquare Innervate (Seattle ’15) raised $1.3M to help developers and gamers build a better relationship. Innervate builds community and marketing tools for games.
 matcherino_square Matcherino (Seattle ’15), a company that developed an eSports engagement platform for spectators and gamers, recently announced that it has raised a $1.2M seed round.
 Cashforce_logo_black_letters_floored Cashforce (Barclays NYC ‘15), a company that brings banks and businesses closer together through an automated cash management platform, has announced a €1M Series A funding round ($1.08M).

 




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