Techstars CEO champions change, says investment doesn’t require physical presence in city

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Earlier this week, accelerator group Techstars announced changes to its operations. But what was supposed to be an exciting new chapter for the organization ended up being a PR nightmare for him.

Techstars has found itself facing criticism for some of its decisions and executions after recently announcing it would close its Boulder and Seattle accelerators. Exit the Austin-based programfirst reported by TechCrunch in December.

For example, Zillow co-founder Spencer Raskoff said: said in X Techstars’ memo regarding the end of the program in Seattle reads:“The brutal destruction of that city’s startup scene.”Techstars Boulder graduate Liz his Jorge too Vent at X About the methodI was surprised at how badly this was handled. ”

TechCrunch spoke to the CEO of Techstars We asked Maelle Gave about what’s going on within her organization and what critics think. This interview has been edited for brevity and clarity.

TechCrunch: Some say moving from local funding to a more centralized model isn’t in founders’ best interests. What do you think about such criticism?

Maëlle Gavet: When Techstars was born 17 years ago, it almost started as a franchise. When I went to the city, there was a managing director who was raising money under the TS brand. But it will exist as a fairly isolated bubble.

This has allowed the company to grow since its inception. At the time, funding was primarily coming from local investors, which was a very novel model and worked very well for the time.

Franchise models have limitations from a profit standpoint. It’s very narrow and very unstable. And educational institutions are usually not interested. So basically this model doesn’t work anymore…we’ve seen it many times. Particularly in the United States, there are now ecosystems in every major city. Over time, we realized that our scale gives us leverage in terms of the infrastructure we can provide to founders, not only during the program but also afterwards.

Over the past six months, we have again tried to raise local funds in three markets to see if we can get back on track. However, we discontinued that test because we saw that it wasn’t working as well as it used to.

So where does TS stand in terms of new funding?

We cannot comment on fundraising activities. Trust me, I wish I could. I really want to set a clear record.

Broadly speaking, we have two types of funds. They are all pre-seed. TSA 2021 is our macro or institutional fund and is our flagship and largest fund supported by institutional funds, endowments and multiple LPs completing implementation this year. This is his $150 million fund, which is also universal with no industry focus. If anything, we try to have a very balanced, very diverse portfolio in terms of industry. In this way, you predict very predictable returns and low volatility. In a given fund, we take 800 to 900 positions across funds.

I also created a solo LP fund. Advanced Cities Fund Just over $80 million. These are corporate partner funds that focus on the specific ecosystem they belong to. It’s a pretty narrow investment strategy when it comes to the industry. Companies want specific relationships with startups to gain access to innovation for potential future M&A and commercial partnerships. It’s a different risk profile.

Last year, we made approximately 700 pre-seed investments. We plan to make about 800 investments this year. Growing in the United States and abroad. The pipeline looks strong.

Some say the lack of local funding has meant less pay and more work for local doctors. What would you say to that?

I won’t talk about compensation, but finding an MD isn’t that complicated considering the compensation package. While we cannot comment on how former employees and physicians feel about the new compensation, it appears to be very attractive to a whole new generation of physicians.

Some argue that having a corporate partner turns a company into a customer rather than a founder. What do you say to that?

That doesn’t match the data we have. I’m a little confused. This may be a no-brainer, but when you look at application and acceptance rates for corporate programs, they show high performance. It’s also very popular with partners that entrepreneurs really want to be a part of, like NASA, eBay, and Ecolab. As a former entrepreneur myself, when I was working in e-commerce, I wished I had access to eBay.

Additionally, we are very selective about who we work with. I think sometimes there is this idea that everyone is accepted.

First and foremost, we The world’s most active pre-seed investor. We live and die by the returns we provide to LPs. There is no incentive to cut profits for a little money with a partner. And, frankly, there’s also the reputational risk.

What is the status of the DEI-focused Advanced Cities Fund?

To be clear, we raised money from a lot of high-net-worth individuals and it happened to be on the JPMorgan wealth platform. It’s not JPMorgan money or JPMorgan funds. We spent a lot of time raising that money. They acted as placement agents for the fund. There seems to be some confusion there.

We have deployed two-thirds of that $80 million fund (launched in May 2022) and are well on our way.

What do you think about the accusations that there was a lack of focus as an organization?

I haven’t heard that. From the outside looking in, we’re a very non-traditional investment company, so it’s probably very confusing to a lot of people. I think a lot of people who put us in the VC box look at us and say, “Wait, how many cities do we have programs in again?” Let me be clear: We are going to invest more this year than ever before. In 2024, we plan to run 50 accelerator programs in more than 30 locations around the world.

Unfortunately I can’t show you our financials, but we have more partners and mentors than ever before.

How many core staff does the company still have? Have there been any layoffs? What happens to staff in cities that are no longer running programs?

We have just over 300 employees. Employees are running accelerator programs or working on ecosystem development programming that builds accelerator deal flows.

There was a recent reorganization and several people left the company. In markets that have stopped running accelerator programs; We tried to redeploy people to other functions and other jobs in other markets.

Some of the reactions that have been happening this week seem to be people not understanding or saying, “Just because you’re not in town anymore means you don’t care.” The idea that Techstars need to be physically present to participate in the ecosystem is strange. No one would ask other investors to do that. We seem to be the only company adhering to the standard of having to physically have teams and accelerators in cities. For example, we invest in It’s weighing heavily across the United States. We are very active in the Midwest. But that doesn’t mean you need to have a physical team everywhere.

We are very active on social media, so we also have infrastructure staff who do fundraising and heavy marketing. We actively participate in numerous summits and events around the world. They are the people who build the technology infrastructure.

One of the highly underrated things about Techstars is that we manage a portfolio of well over 4,000 companies and all of our alumni, mentors, shareholders, and investors, all of whom we support. The fact is that we need to build a fairly rich technology stack for this. We have prepared a hybrid model typical of Techstars. We want our founders to have a very hands-on, intimate, face-to-face experience, but also benefit from our global infrastructure and everything we do. We are always trying to find a balance between hyperlocal and global.

Some say it’s focused on markets where it’s least needed.

We are investors and often end up owning 6-10% of a company. Our job is to find great unstoppable founders and help them become more successful. If they succeed, we succeed and LP succeeds. There’s a very strong association in some people’s minds that the only way to develop an ecosystem is to physically bring it to market using accelerators. What we’re saying is: We relentlessly find founders everywhere, and founders who are more underrepresented than anyone else: women from the Midwest, people of color, founders over 50. This means that we are supporting them.

We have 4,500 active mentors around the world.

And whether you like it or not, there is an ecosystem in which founders are actually more likely to succeed. They can always return to the ecosystem they came from, and we encourage them to do so. But we want them to have connections to Silicon Valley, Los Angeles, New York and London.

And just because we’re not running an accelerator class in a market doesn’t mean we’re not continuing to invest in companies and local events within that ecosystem. They are not exits from the market.I’m sure it will happen By 2024, we will be supporting a significant number of founders from Texas and Washington.

How were decisions made for such LPs? foundry group and silicon valley bank Does it have any impact on your work or decision-making?

They were more than LPs. They are also shareholders.And the work is It’s much more important than the LP work because it was generally a fairly small LP in our fund. Foundry has a board representative, Brad Feld. I received an email from him about an hour ago. Nothing has changed from that perspective.

SVB is still figuring out what to do with its business and is in a transition phase. There are still people on the board.

What are you most excited about about Techstars 2.0?

I am very excited to create a new curriculum that will be more effective. There are many things we are working on. But what I’m most excited about is creating “Masterclasses for Entrepreneurs” like this one. We’ve accumulated so much knowledge over the past 17 years, it’s incredible when you look at our roster of mentors. Historically, unfortunately, a lot of that was siled… We’ve finally figured out a way that if you’re an entrepreneur, you can access our entire knowledge and our entire roster of mentors. Ta.