Why Mentor-Driven Accelerators Like TechStars Matter
When David Cohen and I co-founded TechStars in Boulder, Colorado in 2006, our goal was simple: create a program that would help create a bunch of new startups in Boulder. TechStars ended up helping create a phenomenon known as the “mentor-driven accelerator” now happening in cities across the world.
While David approached me about TechStars in 2006, the Boulder entrepreneurial community was solid and emerging nicely from the Internet-bubble collapse of 2002. David was a successful entrepreneur who had sold his first company in 2001 and had made several angel investments. Even though he saw regular investment opportunities, he was frustrated with the dynamics around angel investing. The angel groups he had been exposed to moved slowly, tortured entrepreneurs more than venture capitalists did during the pre-financing process and didn’t end up making very many investments. The entrepreneurs, on the other hand, didn’t engage much with their angels after they had raised their financing.
David envisioned that TechStars could change this dynamic. His idea was to engage a wide variety of participants–whom we refer to as mentors –in the very early stages of the entrepreneurial process. We’d invite 10 new companies to come to Boulder to be part of a program that lasted 90 days. TechStars would invest a modest amount of money in these companies in return for a small amount of equity and their participation in the program.
Our belief was that the mentors–many of whom were experienced entrepreneurs– would engage deeply with the first-time entrepreneurs (the “TechStars”) over the 90-day program to help them get their businesses up and running. In our best case, we’d help start a bunch of neat new companies. In our worst case, we’d lose all of the money that we invested in the program but we’d end up attracting 20-plus new entrepreneurs to our Boulder community.
Looking back five years later, TechStars has exceeded our wildest expectations. In addition to helping start 80 companies over the past five years, we now have programs in Boulder, Boston, New York and Seattle. As a result, we have over 200 mentors across these cities working with the founders of these companies.
Last summer, we started talking about expanding the TechStars footprint even further to include the many other TechStars-like mentorship-driven accelerator programs that were appearing in cities throughout the United States. This corresponded with discussions we had with members of the White House Office of Science and Technology Policy. The White House realized the power and impact on our economy of high-growth entrepreneurial companies, as distinguished from small businesses, and created Startup America as a public/private partnership to address the issues around accelerating high-growth entrepreneurship in America.
As a result of these discussions, we launched the TechStars Network in conjunction with the Startup America Partnership. The TechStars Network includes 20 other programs similar to TechStars operating throughout the world and is adding new members to the network every month. Today thousands of entrepreneurs every year are benefiting from intense, focused mentorship as they get their companies up and running. As part of the Startup America Partnership, the TechStars Network has committed to have 6,000 entrepreneurs work with 5,000 mentors to create 25,000 jobs in the United States by 2015.
The mentor-driven accelerator model is clearly working, as many of the companies that have gone through TechStars have raised additional capital, become profitable, and, in several cases, already been acquired for nice financial returns for the entrepreneurs and their investors. But, most importantly, we are having a blast helping accelerate entrepreneurship through the United States and the world.
In the following weeks, OPEN Forum will be publishing advice and stories from, and about, the entrepreneurs behind these accelerators and high-impact startups. Look for them here!
Brad Feld is a co-founder of TechStars. He has been an early stage investor and entrepreneur for over 20 years. Prior to co-founding Foundry Group, he co-founded Mobius Venture Capital and, prior to that, founded Intensity Ventures, a company that helped launch and operate software companies.