I had a beer tonight with David Brown, and much to my surprise he whipped out this old email that he recently stumbled across. This email is the birth of Techstars. To give you a little context, Boomtown Enterprises was the name of a small investment fund that David and I operated at the time. I edited the original email very lightly to fix one typo and in one case to protect the identity of the innocent.
From: David Cohen
Sent: Wednesday, February 08, 2006 10:12 AM
To: David Brown
I’m just thinking this can be one of the boomtown businesses.
Providing seed capital to startups with only an idea.
1) We take applications on the web site. Only seed stage companies need apply (those with passionate people and an idea, but no way to get going or who are not sure they can do it on their own – maybe just need a kick in the ass and someone to believe in them)
2) We fly or drive to interview the ones that sound good (perhaps organizing small tours), or have them come here on our dime.
3) We offer the promising ones $10k for a 2% non-controlling, non-board seat interest of their company. They have to come to Boulder for 2-3 months to start the company up.
a. They can work in our offices, or in a hotel, or wherever they want. We provide internet connections, a little office space, etc.
b. They can use the 10k however they want.
c. We have the option to buy 2% more of the company for another 10k at the end of the 2-3 month period.
d. We provide free consulting while they’re here including product feedback, how-to advice, etc.
e. We organize weekly (or bi-weekly) dinners with investors, IP lawyers, tech experts, etc (basically using our contacts to get people to donate a little time).
4) Based on how they do while they’re here, we decide if we want to invest more or not when they leave. This should be easy, since you’re really evaluating the people as much as the product (do they work all hours, do they have passion, etc)
5) If they want, they can stay in Boulder and grow their company here, working within our office space (renting it). Perhaps we have some kind of “space, connectivity + consulting” lease rate.
The only drawback I can think of is that we’d probably need to get a slightly nicer office to really attract companies. We’d have to look successful, and have an environment with couches, whiteboards, etc for them to work in optionally. But we could grow that over time once we get a few and have a good feeling that it’s working.
I am thinking I’ll start working on the web site. Are you cool with putting this kind of info/offer up on the boomtown site? We don’t have to actually do it, I suppose, but we can at least start taking applications and see what’s what. Maybe generate a little word of mouth somehow, and who knows. We can start with a summer program this year. Sublet or rent some open office space from this place for just 3 months or something. Start trying to spread the word a little bit on college campuses, especially CU, CSU, DU, etc.
Thoughts? I think it sounds really cool. Yeah, we have no idea what we’re doing.
So that’s how we came up with this crazy idea just 868 days ago. I remember putting up the basic web site later that same day. Obviously, it has evolved since then. Now we have some sense of what we’re doing, for example. We didn’t launch Techstars that summer – it just wasn’t enough time to raise the necessary funding and morph the idea into what would ultimately make it successful – being mentorship driven. But we got there the next summer, and we’ve been learning and evolving ever since.