As Techstars restructures, some former employees say it has lost focus on what makes it successful

Well-known accelerator group Techstars declare This week saw a series of changes to its operations, including the closure of some city-based projects.

Criticism of its decision sparked debate on social media channels from former members, who argue that the famed startup accelerator has lost focus on what historically made it so successful: flocking to a program where no other such program has Districts conduct city-based operations. A former Techstars managing director (MD) told TechCrunch that moving away from local fundraising for city-based accelerator programs was a mistake.

to be closed soon its boulder and Seattle Accelerator After the group decides pauses its Austin projectTechCrunch reported the incident in late 2023.

Given its extensive global footprint and long history of investing in early-stage startups, changes to the way Techstars operates will impact founders and local venture ecosystems around the world.

local connection

Former Techstars Seattle managing director after Techstars decided to exit certain markets Chris Devore writes a long letter Criticized the organization’s strategic choices, including concentrating fundraising efforts and developing plans with corporate sponsors as the financial backbone.

Maëlle Gavet, CEO of the organization Jump into discussions and participate publicly Back and forth with him.

But others privately expressed at least some of Devore’s sentiments to TechCrunch. A former managing director (MD) said Techstars’ having local LP investors means more people in these cities can participate in its local initiatives. When TechStars funding later came from centralized funding, there was little incentive for locals to ensure the success of startups in their own backyards.

Devore made a similar argument in his post, saying that choosing to focus fundraising away from local cities will also have an impact on the talent TechStars attracts.

The result, he wrote, comes after “it became clear that many new projects and general managers were struggling to raise their own local funds.”[ion of] This incentive system attracts highly qualified managing directors to work on projects and connects investors and mentors in each local market. “

In an interview with TechCrunch about the changes announced this week, Gavet said the local funding model has reached its endpoint because it no longer works. Over the past half year, Techstars “tried this model again in three markets for local fundraising to see if it would take off again,” and she said the experiment “confirmed that it wasn’t working as well as it had before.” That’s good.” “

The former general manager also criticized Techstars for working with corporate partners to fund the project, telling TechCrunch that customer churn was high.

Managing directors say the shift away from local capital and towards a greater focus on corporate funding means city-based promoters and founders are no longer the focus of Techstars. Devore had a similar sentiment, writing that Techstars went from “a passionate commitment to founders and the entrepreneurial journey to a system focused on generating cash from paying enterprise customers.”

Gavitt again disagreed with that sentiment in an interview with TechCrunch, saying that enterprise initiatives “are a key competitive advantage” for the organization and will continue to be so.

future

One unresolved issue facing Techstars is its own fundraising situation.company A large amount of funding was raised in 2019and $150 million fund closed in 2021.However, a 2023 SEC Filings The second $150 million vehicle has not been updated since its initial submission. Is there any progress on the new fund? Gavitt wouldn’t reveal it, but hinted that everything was fine. She told TechCrunch she couldn’t “comment on fundraising matters,” but said she wished she could, in part to “set the record straight.”

TechCrunch has learned from people familiar with the matter that the 2024 Fund has raised some capital, but we can’t confirm the exact amount or whether it is on track to meet its $150 million goal.

While growing a business is never a smooth process, Techstars’ revamp and new path will be easy to review in time. Does the accelerator group support startups that are growing rapidly, going public, or selling at a high price? If so, is it more or less often than before?

To be fair, its biggest rival Y Combinator has also restructured its operations in recent quarters, Exit late-stage investmentand Reduce queue size At the same time return to the face-to-face model. Still, Techstars faces competition, not only from domestic Y Combinator but also from other accelerator programs in the United States and elsewhere around the world.

At least Gavet seems to believe that Techstars’ best days are ahead.

“Last year, we made about 700 pre-seed investments. This year, we should make about 800 investments — growing both in the U.S. and abroad. The pipeline looks strong,” she said.

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