Techstars’s new CEO on the state of the famed accelerator and what’s next for 2020

Like another famous accelerator program founded around the same time, Techstars has grown considerably since its 2006 launch in Boulder, Colorado.

In fact, the brand seems to be in so many places that it’s hard to keep track of its reach, along with its impact. Where is Techstars, exactly? Who funds it? And how many startups have passed through its program?

We caught up yesterday with co-founder and CEO David Brown, who shared CEO duties with co-founder David Cohen until recently, and he got us up to speed while getting his family out of town for the upcoming Thanksgiving holiday.

First, some stats: Techstars accelerators are now in 49 cities around the world, including across the U.S., as well as in Europe, Australia, Singapore and South Korea, among other countries. Each accepts 10 companies each year that pass through a three-month-long program that ends in a so-called demo day. This is typically at a physical hub, though, like YC, Techstars began to experiment with virtual batches a couple of years ago. Two weeks ago, for example, it launched a program in partnership with the U.S. Air Force, the Netherlands Ministry of Defence, the Norwegian Ministry of Defence and the Norwegian Space Agency called the Techstars Allied Space Accelerator.  Beyond its focus on startups that operate, the programming is almost entirely remote.

Altogether, 2,000 companies have now gone through the Techstars program. Some of its better-known alums include email service provider Sendgrid, which went public before being acquired last year by Twilio; and the pharmacy company Pillpack, which sold last year to Amazon. Other high-fliers that have yet to exit include drone delivery company Zipline, cloud infrastructure startup DigitalOcean, and password manager LastPass.

Techstars invests up to $120,000 in each of these companies for an ownership stake that ranges from 6% to 9%, depending on how far along the company is “among other factors,” says Brown.

That capital comes from Techstars’s limited partners and its balance sheet, money that itself comes from a few places: corporate partners that pay the outfit fees for “corporate innovation,” including by introducing them to relevant startups; exits (roughly 200 Techstars companies have been acquired to date and some of those returns are now being reinvested in other startups), and management fees on funds that Techstars raised so it can invest in the follow-on rounds of its most promising alums.

Presumably, we can expect the fifth of these funds any minute, given that Techstars closed its last flagship fund with around $150 million in 2017, and most outfits are on a two-year fundraising cycle. Don’t be surprised, either, if Techstars winds up announcing a later-stage fund at some point, similar to the Y Combinator Continuity Fund. At least, when asked if this might be coming, Brown said today that “anything is possible.”

Certainly, it sees a lot of deals. According to Brown, Techstars receives around 35,000 applications each year from teams that first fill out an application online, as well as send in a video about the team and the product. What it’s looking for first and foremost, says Brown, is a founder or team “who is obsessed with solving a particular problem because they’ve experienced it or a loved one has.” (He adds that, like Y Combinator, Techstars prefers teams to solo founders, though it would prefer solo founders to teams that don’t get along terribly well.)

He also stresses that early is better, even in a day and age when more mature startups occasionally pass through an accelerator program. “In the earliest days of Techstars, that meant two people, an idea, and a dog and not much else, and we’re past that [stage typically], as the definition of ‘early’ has expanded over the years. But the company with $20 million in revenue and $40 million in funding is very atypical.”

As for where it’s shopping, Techstars isn’t branching out into anything too crazy, suggests Brown. It remains “focused primarily on hardware and software internet companies — not pharmaceutical companies or companies with years of regulatory approval ahead of them or that [require many] millions of dollars for capital expenditures.”

It does plan to expand into new geographic locations around the world next year, though. And more programming is likely, too. “We want to help founders at different stages, not just at the accelerator phase but as they continue their journey.” The outfit already helps startups grow their sales organizations and meet corporate partners; it has staff who is dedicated to helping with a lot of those things. But they may become more institutionalized now, he suggests.

As for trends Brown is observing, falling valuations are not among them, though he does expect them to come down when a market correction invariably comes. He thinks, too, that India and Asia are “about to explode,” so Techstars is focusing more of its attention on those regions as a result.

Brown also says he’s observing some impact from the woes of WeWork and Uber in that founders who, not so long ago, wanted to grow at all costs, are starting to become more risk averse. “Some of them burned through a lot of money. They’ve had to lay off staff. We’re definitely starting to hear more talk about ‘hitting singles’ and ‘doubles’ before scaling. They want to stay on track.”