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Techstars: A Blueprint For Corporate Innovation

Interview with Chris Adelsbach, Managing Director at Techstars

“Techstars…the worldwide network that helps entrepreneurs succeed.” That’s underselling it slightly…It’s also a multi billion dollar organisation.

 Techstars Stats

• 168 countries
• 10,000 mentors.
• 300,000 alumni from tech stars programmes, including startup programmes
• 30 Techstars accelerators on 5 continents
• Boulder is now the USA’s 6th largest VC ecosystem in America – …..mainly down to Techstars and its founders
• 3 components: Techstars Startup Programmes, Techstars Accelerators, & Techstars Ventures
• 90% of the companies that have gone through the programmes since 2007 are operating or acquired
• 119 companies acquired via M&A
• $3.7B raised
• $9.7B market capitalisation
• 10,000 jobs created
•Techstars Ventures is a $300m VC fund
• 1 in 20 companies (in the US) that raised a Series A financing in 2016 was a Techstars aluminus (!)
• The valuation of accelerator companies+ Techstars Ventures investments is $80 Billion
I’ve known of Techstars since getting involved in the startup scene. In maybe 2014, I used to see kids in distinctive green Techstars T shirts hanging around Shoreditch, or more likely, hunched over a laptop in a coffee shop. When Disrupts magazine, (now Disrupts.com), produced a Fintech edition in July 2015 I had the opportunity to meet David Cohen, one of the co founders of the organisation. He gave us an interview and this quote:

The Techstars mantra is “Give first.”

Give First. Now there’s a thing. A potentially dangerous thing. I’ve had experience of ‘Giving First’ to corporates. It’s a great way
to get exploited. It’s also a very enticing idea, because if it works, systematically as a commercial principle, it’s a very free and easy and humane way to exist and expand.

It’s also an inversion of the typical ‘corporate greed’ mentality, IF it’s actually practiced in reality not just used as window dressing.

Obviously it’s the corporates that should be giving to the startups. not just individual startups, but the startup ecosystem. Unconditionally.

It’s two years later to the month, and I’m now talking with Chris Adelsbach, Managing Director of Techstars fintech accelerator in London, run in partnership with Barclays, and I’m curious. Has the Techstars ‘Give First’ mantra filtered down? Critically, does it work, commercially? Or is it just PR without substance? It’s a nice idea, Give First, but I want to know if it can be lived.

Chris himself is an entrepreneur, a successful one at that. He joined Techstars as a mentor in 2014 after exiting from his own financial services company, Marlin Financial Group, sold to an undisclosed NASDAQ- listed entity. He’s also recently named on LinkedIn as the most active fintech angel investor in the world over the past three years, in terms of number of investments, over 50 companies, two of which were in the top 20 equity raises this year. (Atom Bank and Smart Pension).

Having started as a mentor with Techstars, he has a particular insight into the organisation and the programmes, which in a super simplified way come down to three sections in three months. Mentorship month one, Traction month two, Storytelling month three. I’m curious especially about the mentors. I can’t say I’ve ever had one, personally, no doubt to my detriment, and

Techstars is part of the startup scene infrastructure, which is exactly what it aimed to be

I’m genuinely interested. What do mentors actually do? And why is it such a big part of the Techstars program? And who are the mentors, how are they qualified to be mentoring these really innovative company founders?

Mentors. what do they do?

“I’d be happy to introduce you to some if you’d like! Mentors are incredible. They are often at the top of their game, founders with exits, former and current C-suite bankers, partners at magic circle law firms, public relations directors, executive search directors, partners at hedge funds and VC’s. They’re an international bunch. Increasingly, there are more female mentors in Techstars, now about 1 in 4. Many of them dabble in Angel investing too.”

“They are door openers who take pleasure in finding one or two companies that they can take under their wing and bring them straight to the top.”

“Critically, they share our values. They Give First. Founders rate all their mentors and the best ones are invited back. Mentors sometimes become investors, founders become mentors, one company from our last programme, Shieldpay, hired two of our mentors. Eight of their mentors invested
in their Seed round and they hired two Techstars Associates.”

Not a company that does technology. Technology AS a company

Bird: There seems to be a high degree of freedom within the Techstars Network. People move through it.

“Ultimately it comes down to the network effect again. The mentors are part of the network. If they don’t know what you want to know, or have what you need to have, they probably know someone who does, or might. What it isn’t is listening for 20 minutes then telling the cohort member what to do. It’s about engaging in the creative process, the exploratory process, it’s about being a sounding board, it becomes two
way mentoring. The people they are giving insight to are also smart, and so both parties are learning from each other.”

Listening to Chris I’m very much starting to see the visual of the organisation structure, it’s very tech, networked systems learning from each other and pooling the collective intelligence, it’s a humanised version of a digitised system. It has an elegance and inherent truth, cohesive, correctness, I’m enjoying looking at it. Is it really based on a principle of giving?

“Back to the primary techstars value: Give first. Give time, give intellect, mentors are not paid, they do it because they believe in the value of it, because they want to give back.”

Bird: And also, I suspect, they want to be part of something amazing, extraordinary and profound in both concept and delivery and measurable success. One of the startling stats Chris reeled off to me, and he seems to have a limitless supply of them, is that for every series A funding round in America last year, literally across all sectors, 5% were from Techstars. To clarify that, 5% of ALL series A funding rounds (value usually $5m – $15m ) were Techstars alumni. One could conclude that Techstars has a measurably important place in the American economy, and as it grows into Europe, Africa, India, and beyond.

Techstars is part of the startup scene infrastructure, which is exactly what it aimed to be, an accelerator not just of the individual companies, but of the entire technology sector, and more than that, the entire entrepreneurial sector itself, which is basically a cultural component.

Chris: “Teams find themselves surrounded with people who find it hard to say no.” People who find it hard to say no. Firstly, because their very nature is to give. It’s core to them. However, these same naturally giving people are also very successful and have created wealth for themselves and others. How? By giving? How do you create wealth by giving?

– by connecting people is one way.

– by creating networks and being part of the value exchange across those networks. Which is exactly the kind of mentor Techstars seems to want and attract.

– by trusting in the system. When the system is of like-minded people, trust is well placed. – In a network of ‘givers’ another ‘giver’ just becomes part of the whole successful enterprise.

– there are no barriers to movement through the network, for anyone, and this I think is hugely important. A mentor can become an MD of a programme, a mentor can become an investor, a cohort founder can doubtless become a mentor, and a mentor can become a future early hire to a Techstars alumnus.

– There’s no artificial constraints, no rigidity,

it’s about passing value, and that’s all. The value could be advice or know how or technology or another connection or money or legal counsel or any other intellectual or digital or literal currency. Techstars itself is a network, in the same way an intranet is a network. Everyone has access to everyone else, ultimately, through a series of connecting points. (Techstars also has an intranet, which I imagine to be a web-based version of itself.)

This in my mind is what it means to be a true technology company. The technology principles are also the foundational principles of the structure of the human organisation.

Not a company that does technology. Technology AS a company. Profound difference. I’m digressing somewhat, but not overly so. The fundamental difference in attitudes, in values, in actual principles, is one of the major reasons why ‘startup’ newcomers are removing the old style companies from the tables. It’s not just what they do is different, it’s how they do it, how they structure the entire organisation in an integrated built for growth way. It’s why it’s hard for traditional companies to even survive, even when they start with all the money, all the staff, all the resources, all the customers even. An upstart fintech can come in and take chunks from them and the organisation literally doesn’t know how to react, can’t react, even when it knows what’s happening, because its corporate structure is calcified.

Chris tells me Techstars, at the end of each programme, asks the participating companies to rate the mentors and the corporate partners, which include companies such as Barclays, Metro Group, SAP, Amazon, Ford, and Techstars itself, as a service provider.

They even have an equity back guarantee. If a graduating company feels let down, under delivered to, failed by the programme they literally get their equity back. And this is right and proper actually, and Chris challenges that every accelerator should do the same, and indeed they should, and if they don’t why not.

It just occurred to me the ‘give first’ principle, was this somehow a consequence of the financial crash, which was pretty much an inversion of that same principle, I wonder. I digress. And ask Chris about the selection process for the actual startups for the programmes.

There are startups and there are startups. Techstars attracts all, but accepts only a particular standard of them, in defiance of the stereotypes actually. Stereotypically, startups are male, young, early twenties or even teens, and there’s a lot of early stage startups that fit those. But you probably won’t find them in Techstars. Chris again reels off names and credentials, founders who have already had major successes, “this is not startup school at all. This is for amazing founders who value their time, who want to do more faster. An accelerator buys you time.

More Techstars Stats:

• Average age in the past three cohorts: 38 • Average founder has been a founder already
• Average founder has raised a seed round before entering the program, up to 7 figures
• Average team 5 – 10 people
• Most companies have an MVP •About 1/2 have revenue

Examples of “later stage” companies joining the programme include:

• Simudyne: had raised $1.5m pre- programme.
• Post Quantum: had a product, IP protection and paid contract with UK Government and NATO.
• Alyne: 5 figure MRR pre programme.

“Sometimes we go early but only if the founder and team is absolutely incredible: Everledger: Leanne Kemp, had three exits to three listed companies BEFORE she entered the programme. Atlas Money founder was a Peter Theil fellow, founded his first company at 17 (and raised 8 figures) and had tried out to be an US Olympian. Shieldpay: another two time founder.

I ask Chris about the process of selecting startups. How?

“Madeleine and I do a 12 country scouting tour across Europe and America. In every
city we meet 20 to 40 founders face-to-face, in the evenings we’d have dinners with helpful people, VCs, community leaders, maybe alumnus companies. We also do a bottom- up analysis on over 3000 companies and generally reach out to 100 that catch our eye. We’ll want to speak to and ideally meet the founding team in person. The idea will only get you so far. We usually get about 700 companies that apply each year so we are accepting the upper 1%.”

Bird: There’s a very people-centric, human approach to this, especially considering that many of the companies are in the business of developing technologies that actively remove human beings from processes.

“Ultimately it’s about people. Finding driven people that work well together. Mission driven. When you meet them, you know.
You can’t tell by looking at a pitch deck.

There is no algorithm for identifying future successful startups. (There are some people and programmers that are trying to hack that though.) I embrace more serendipity, I look for a team that didn’t meet each other yesterday, that shares history, compliment each other, diverse, probably a technical co founder, likeable. In early stage investing, it’s a big relationship. I want to be a value add investor. As an early stage founder you need favours. You have no money, no resources, people do things because they like you. If they’re arrogant or don’t receive mentorship well, that’s a problem. I look for intelligent, engaging people that I want to spend time with.”

A human-centric approach to technology. A giving first principle to making wealth. A network of like-intentioned individuals, creating companies at scale, in a self- proliferating, organic, futuristically digitised system.

A matching of corporate strength and individual qualities.

Techstars is the commercial embodiment of startup culture.

And I wonder, which came first.

I wonder, if there had been no Techstars, would the ‘startup scene’ look different? I think it would. I think perhaps Techstars really helped define it, the culture of it, the way it is. And for some reason, that moves me.

It should also move every corporate and brand to look hard at what they are doing, and why they are doing it, and in many instances, to change.

If companies go to techstars.com, 11 programmes are presently accepting applications all over the world!

Techstars http://www.techstars.com

Bird Lovegod,
Editor of The Fintech Times

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