TechStars is a new startup fund/incubator that’s generated a good discussion in the TechCrunch Forums. Like YCombinator, TechStars is looking for flat broke entrepreneurs with just a seed of a good startup idea.
They are taking applications now, out of which ten winners will be selected. The thirty of so winning entrepreneurs (TechStars anticipates an average of three founders per idea) will travel to Colorado on May 21, 2007, and spend the summer in Boulder building out their ideas. TechStars will also give each founding group $15,000 in seed funding, and help them locating housing at the nearly University of Colorado, Boulder. TechStars will take 5% of the equity in each startup.
This is comparable to YCombinator’s model, where they give $6,000 per founder and take 6-8% of the startups equity. And the model has worked so far, with a number of promising startups launching, and YCombinator-funded Reddit being acquired by Condé Nast last Halloween.
TechStars is solidly backed, with investments from David Cohen, Brad Feld, Jared Polis (founder of Blue Mountain and ProFlowers) and David Brown. There’s a long list of mentors as well who’ve promised to help guide startups over the summer.
We are seeing a dramatic shift as (some) investors are lurching away from providing big capital to over funded web startups to these structured, mentor-driven angel investments. YCombinator and TechStars fill a definite niche, as does Charles River Ventures recent foray into small (and quick) investments as well.
I’m definitely going to take at least one trip to TechStars this summer and do some interviews and meet this new crop of startups. TechStars will repeat the program each summer.
Interesting concept. I’ll have to check this out.
Another interesting incubator model like Y! Combinator– just curious though what is there in Boulder, Colorado. To get the startup going, one must be close to the ecosystem of venture capitalists, talents, and companies. Just my 2 cents.
What’s the benefit? I can make about $5,000 over a summer working full time (40 hrs.) a week and work on a web project in my free time at my parent’s place. This place is offering $5,000, a substantial sum of which will be consumed by living expenses for those who don’t live near Boulder, Colorado. And they take 5% stake in your company. So at the end of the summer, you’re still broke.
Mike – it’s $15k…and a whole lot of mentoring and marketing.
i love this trend of funding more, cheaper startups, but it’s hard to accomplish anything significant with $15,000. assuming $5,000 pays for a few months of hosting once the site goes live, the remainder can only support about 2.5 months of design and development (assuming 2 founders).
sounds more like an extended job interview than a round of funding…
I would have more respect for such a venture if they put up money in the six figures as Charles River Ventures is doing. Basically, anything that could be done for $15K has almost no prospect of success, with few limited exceptions which have already been done (Del.icio.us), Reddit at a time when web 2.0 was just starting.
entrepreneurs who would like to get involved but are looking for a killer idea – please contact me (rob at domain name). I have a unique idea for preventing blog comment spam and dont have time to be involved but would like to make introductions and help put the team together. there is a certain company that also has an indirect interest (it would validate their product in email space) and they own some technology to help out.
Umm…
Did Jared Polis change his name? Didn’t he used to be Jared Shultz? I knew a guy growing up who I always understood ran bluemountainarts.com which his parents started and then went on to run an online flower delivery company. That guy had a name and it wasn’t Jared Polis, it was Jared Shultz.
-david
Of course I meant to spell his real name correctly, Jared Schultz.
Yes – same Jared. He changed his last name from Schultz to Polis five+ years ago.
Re: Boulder/Denver
I’ve lived in Denver since May ‘05, and I can tell you that it’s the best place to be outside of Silicon Valley. There’s a strong technology community, and lots of exciting things are happening. Having met Brad and others at a BrainJam held at the Superior Mobius office, I am confident that TechStars will succeed, as it has the right people and is located in the right area.
If you don’t know anything about the Denver/Boulder region, I suggest everyone take a visit. Not only has it improved my quality of life personally and professionally, but I’ve also met some of the greatest people ever. Did I mention that lots of things are happening there?
If you view the opportunity as just about getting a little seed funding, you’re not seeing the big picture.
Consider the connections and insight provided by the 35 or so mentors and the organized investor day at the end of the summer. The goal is to get the companies to either bootstrap through or to use the mentors and connections to access capital with a solid plan and progress on the prototype.
Y Combinator and TechStars offer something much more than money. They offer a supportive environment where a young entrepreneur can thrive. You can’t put a dollar value on the sessions Y Combinator and TechStars offer.
Also remember that it is much easier to get Techcrunched as a Y Combinator or TechStar company; that publicity extends to other areas as well.
And to TechStars: congratulation on the Techcrunching! The Web 2.0 has dubbed you legit.
I like the title “Summer Camp for Entrepreneurs” – cute
It’s not so much the money but the potential connections and contacts you get from being at the camp.
If you have a talented team (10X guys) you can do a ton on $15K.
Foneshow has gotten to beta on less than that as far as hard costs are concerned.
Of course Nic and I aren’t paying ourselves, and neither of us are taking on any outside clients.
Giving up 5% for introductions is a terrible deal. If you are doing anything even mildly interesting, VCs will be happy to meet with you (for free!). This summer camp is a naivete tax on college kids.
Here’s a startup idea: a YouTube/MySpace camwhore search engine. Search by hair color, ethnicity, measurements, or whatever, and it generates a list of results. They could call it My-You-Ho.
“VCs will be happy to meet with you (for free!)”
Want to forward my business plan to some of these VCs for me, with your personal recommendation?
I don’t know any venture capitalists. I’m a naive college kid. So I have to pay a 5% tax. I figure that 95% of eighteen billion dollars is enough for me.
I would echo Ron Lewis’s comments. After having lived in Boston, San Francisco, Austin and London – I would have to put Boulder near the top on innovation, energy and quality of life. The venture community is smaller, but very active. The benefit of having mentors like Brad, David, Jared and co. is not only icing on the cake, but could mean the difference between just having a good idea and realizing your vision.
We’re working in the current YCombinator batch. We’d already raised a sizable chunk of angel money so we didn’t do it for the money. We did it because:
1) We came from a culture where the majority of people don’t do startups, they go into banking/consultancy/law (we’re from London) and we wanted to be around a group of likeminded people. This naturally brings with it a group of friends but more importantly, potential synergies/overlaps with the work everyone is doing – collobaration between YC companies is common and we’ve already benefitted from it in a few weeks
2) There’s no denying that YCombinator has a great brand name, we’re not so much concerned about the press coverage as the investor connections. When you have a ready made network of investors interested in your product, that’s one less distraction from your primary focus on the product.
3) The partners are great, we’ve had the most contact with Paul Graham and each time we’ve met him he’s left us buzzing with motivation and new ideas. He’s a think big guy who has the respect of all hackers and has also cut it on the business side. Trevor also had specific experience of what we’re doing and Jessica brings a lot of support and a great network to the table.
All in all it’s been a great experience so far and it’s about far more than just the money. As for techsceptic’s comment that VC’s will meet you if you’re doing anything mildly interesting – you obviously don’t have too great a grasp on how the industry works. Time is literally money for VC’s – they don’t invest in startups they havent been referred to by someone they know and they all have a big deal of respect for YC.
Good luck techstars! It’s a great idea and set up and I’m sure everyone will see the benefits in a few years time!
Also, Y Combinator leaves single founders out in the cold. Paul Graham just won’t take them.
David Cohen of TechStars is offering to match up single founders.
http://www.tech...5899-as814.html
I grew up in Boulder, “Go Knights!” Its a was a great town til the 90s, the flocks of replublicans moved in and kicked out the hippie trash. I live in San Francisco now…no way Boulder compares. I do think its better than the valley though.
What is the “success rate” for YCombinator companies? Is it substantially higher than other vc funded companies?
Wow, this is a great idea.
Still, my partners and I live in different geographic regions and have real world jobs. I would have to quit my job which is something I use to hedge myself just in case my start up is unsuccessful.
Im still enchanted with the idea and will likely apply. I hope the old lady likes the mountain air.
Creative energies are abuzz in Boulder. Boulder is a prototypical “creative class” type of city with a solid synergistic entrepreneurial community. There is lot of startup activity, a good number of successful companies and some great stuff that is still in the oven
There is lot of support for aspiring local entrepreneurs, check out coloradostartups.com. It’s the kind of place one can just setup some time with a local investor and spend time kicking around ideas and getting some tips/advice (like I did on Monday afternoon). Yeah, it’s that good. If you have never been, take trip to Colorado, step on Pearl Street and you are bound to love it.
This is a good idea
but one flaw is limiting it to ten – does excellence have a numerical cut-off point.
It would be sad if they had a dozen great prospects – and had to go through the ordeal of deciding which TWO would get dumped
In regards to #2 – Boulder/Denver is one of the fastest growing entrepreneurial environments there is. The high quality of life attracts top-talent from a wide range of industries (think Aerospace, Bio-med, Software, etc) and there is plenty of money floating around. Boulder County has one of the (if not the) highest number of PhD/MS/BS’s per capita and the multitude of universities/colleges (particularly the University of Colorado) provides ample resources for brushing up/filling in any skills you’re lacking.
I agree with #25, if you’ve never been there make sure to add it to your list of must-sees.
Absolute joke – 5% for 15K – no fking way. bootstrap it, get off your arse and work and save cash – stop drinking at bars & partying.
5% for 15K is 10000% unreasonable.
“Notsure #26″, not sure where you’re coming from
Check out the list of mentors… http://www.tech...age/pg5883.html
I would throw down top dollar to pick the brains of this stellar lineup. It’s like getting paid to achieve a condensed Masters in Entrepreneurship. And Boulder is the best city in the country hands down, and I’ve lived in some goos ones. Brilliant people, beautiful place, great university, and losts of solid tech startups sprouting up.
Awesome idea. I would have killed for something like this when I was in college and launching my first startup. Maybe someone would have told me to lease a laptop instead of lugging a desktop PC to a prospective client’s office for the pitch. I was so young…
$15K is plenty to of money to get a project going. MyBlogLog’s hard costs for year one were less than $15K if I remember correctly. God bless cheap hosting and the LAMP stack.
Seems really interesting..check out Nirmalabs, India. very similar to this kinda model. Only difference NirmaLabs bets on individuals and also funding is also more..upto $40,000..rememeber..this is not in US,,,its in India
Should be interesting to see if Paul Graham from Y Combinator is right, or if these guys can prove him wrong
http://oneeyede...d-feld-and.html
I can’t help but wonder what happens to all the ideas that don’t result in a successful application… Do they, TechStars, with their virtually infinite sources of funding, steal your idea and make it their own, knowing that you, a “broke entreperneur” likely won’t have the resources or connections to do it on your own?
I’m pretty sure that’s what happened with the original Matrix movie. The writer/director brothers ran a Science Fiction contest for unknown authors to win prize money then took the majority of the Matrix storyline from one of their submissions and made it into a billion dollar enterprise.
I don’t like the idea of submitting my “super awesome” ideas to people who can turn my vision into a reality all by themselves within a few weeks due to their connections and resources.
is it open to non-US residents?
#33
Brooke, ideas alone, without execution or a team, are not worth shit.
Ideas are like assholes, everyone’s got ‘em, what makes you an entrepreneur is the ability to execute.
@35
Eric, I can agree with that to some extent, however some ideas out there are novel and worth something. Maybe you can execute your idea as an entreperneur but are weak in terms of marketing or financial resources. Then again, maybe thems just the breaks of business.
I’ve got to pipe up here.
Techstars is designed to create startups, not cash in on them. My guess, and I’m hoping that David would agree with this, is that the 5% equity stake in the companies is designed to perpetuate the system.
Techstars, Y-combinator, Junto and others have to build a sustainable organization in order to prevent burnout. Y-Combinator I’m sure, and Techstars I think have employees who are paid. 5% seems reasonable to me for a leg up to a real company. Of course 5% of nothing is still nothing.
There are a couple of comments on this thread from those who know not whereof they speak.
I’ve submitted my to TechStars, hopefully I hear something from them. I’m still going to apply to YCombinator once they start accepting applications for their summer program in Boston
Has anyone else been struck by the 1:1 correspondence between the TechStars application and the Y Combinator application?
I’d have to agree the mentoring/connections/location is worth more than the 15k. Good to see Boulder an alreay pretty cool place getting better.
Now if the VC’s and Investors over here in Sacramento could get something like this going….oh wait they only do real estate deals here
Having to drive 100 miles to get to the epicenter where people “get it” is a complete pain. In Febuary I have to drive down to SV/Bay area 4 times in 1 week…..and hope the traffic gods are on my side….
@Brook
Thats why its important to make sure your around people you trust, who have your best interests in mind, and who want to help you build a company. Thus the mentoring model.
@Erik
Spot on, the ability to execute, (on a good idea, not a bad one) is directly proportional to success. Unfortunately, you also have to have an uncomfortably high toleration for failure, something most people dont want to deal with either.
Companies are built by great cohesive teams of people working toward a common goal set executing on an idea, this dosnt work in reverse, great ideas do not generate companies without great people behind them.
For someone who is completely ignorant to practices and procedures within this industry an idea like this is at least a shot. If you have a great idea and it fails, then they use it and create an empire, congrats on their part because you failed. But if you were to never attempt it then you have already failed.
This 3 month experience is likely to be more informative than 4 years in college and the connections dwarf the 4 partied out, barely passed, thousands in debt, college years of a bachelors degree.
Plus there is nothing to lose except 3 months of your time. So not taking this opportunity if it was offered to you would be almost blasphemus to the idea of entrepreneurship.
$15k is pretty good money to get a small idea rolling. I love the trend shifting to smaller investments (as noted in the article) since all three of my start ups will benefit, and the guidance/hand-holding/help is always great (though a smart exec would just put an advisory board in place on his/her own). The only thing I don’t like is how it sort of has a very youth/young feel to it – it looks like something a high school kid should get excited about (even though it’s obviously going to be geared toward older entrepreneurs). To me, their site feels like it’s intended for kids.
Don’t get me wrong, I think this idea is fabulous, I guess I’m just a bit paranoid of what could happen if they were untrustworthy with the applications.
$5k per person is pretty good and I think you could make it work if you had to split the rent and other bills between 3 founders. Also, giving up 5%, non-controlling/non-voting rights equity isn’t too bad when you consider the wealth of mentorship, networking, and marketing experience you’ll have gained throughout the summer. And think about it, if they’re invested in your company, they’ll want you to be successful. 5% of a worthless company isn’t really in their best interests if you ask me…
I’d also like to know if non-US residents can apply (Canadian here). I’d assume there would be visa issues with working and running a business in the US as a non-citizen. I couldn’t find any limitations on their home page though.
Anyone in Los Angeles know of similar Angel fund groups? I am looking for a mentor who’s local and can help me take my awesome idea to the next level.
For those that asked, TechStars is indeed open to those outside the US.
I’ve addressed the concern over the value of ideas and the secrecy of them on the blog at TechStars.org. I’d invite anyone worried about this to take a look.
@ ty you can email me at patricia@stylediary.net – i’m in LA and have a lot of local contacts.
I wish we had these things in the uk.
Travelling to the US and paying for expenses plus my living expenses in the uk for 3 months would more be a lot more than 5000 dollars because thats about £2500 and thats not a lot :p
In fact I would love access to those connections and advise for 5% and no funding. Just as long as it wasn’t in bleedy london!
So I spend all that time their and build them a website that I get 5% of? This is a borderline scam.
1) You can tell the difference in philosophy and approach between TechStars and Y Combinator in their respective names.
2) Wow – the TechStars application questions are exactly the same as YC’s.