Start-Ups Get a Jump-Start with TechStars
With the invitation to budding companies to “Do more faster by joining forces with the #1 startup accelerator in the world”, TechStars offers seed funding, mentorship and a network of connections to benefit both start-up companies and the investors who take the leap of faith to invest in these companies. With programs based in Boston, Boulder, Seattle and New York City taking place annually, TechStars is a seed stage investment program, backed by experienced entrepreneurs in the tech sector who are willing to put the time and effort into mentoring in their various fields of expertise. The program runs for an intensive three-month period, and of the literally hundreds of companies that apply to participate, an average of only ten companies per city are selected. At the end of the TechStars program, participating companies are given the opportunity to make a sales pitch to angel investors – wealthy individuals who are prepared to provide capital to promising enterprises, typically in exchange for ownership equity or convertible debt.
Start-up businesses generally carry an increased level of risk, but they also present the opportunity to get in at ground level and reap the rewards of success. In the fast-moving and unpredictable world of technology it is not an easy task to predict how the consumer will respond to a product or service on offer. For example, around five years ago, quite a number of the original investors in the start-up company Odeo, which had Twitter as a side-line project, decided to cash in their investment, reportedly for US$5 million. However, had they held on for a while longer to see Twitter take off as a valuable social interaction service, they may very well have doubled that amount. When Twitter broke away as a separate venture, some of the original angel investors re-invested in the new start-up company and continue to reap the benefits.
Entrepreneurs who have been assisted by the TechStars program, which has been running since 2007, agree that, while the seed funding is important, the one-on-one mentoring offered through the program is invaluable. TechStars mentors include a wealth of talent, street-smarts, courage and enthusiasm. Combine this with determination that program participants display, and you have a recipe for success that investors would do well to take note of.