Well-known accelerator group Techstars recently announced significant changes to its operations, including the closure of some of its city-based programs. The decision has sparked criticism from former members who argue that Techstars has deviated from the strategy that historically contributed to its success.
Key Takeaway
Techstars’ recent changes in operations, including the closure of city-based programs and a shift away from local fundraising, have sparked criticism from former members. The organization’s strategic choices and future fundraising efforts will be closely watched as it navigates a new path forward.
The Impact of Changes
The upcoming closure of its Boulder and Seattle accelerators, following the pause on its Austin-based program, has raised concerns about the impact of these changes on founders and local venture ecosystems globally. The move away from local fundraising for city-based accelerator programs has been particularly contentious.
The Local Connection
Former Techstars Seattle managing director Chris DeVore publicly criticized the group’s strategic choices, including centralizing fundraising efforts and building programs with corporate sponsors as financial anchors. The decision to centralize fundraising away from local cities has also raised concerns about the talent TechStars could attract and the incentive system for local investors.
Response from Techstars
Techstars CEO Maëlle Gavet engaged in a public discussion regarding the criticism, defending the organization’s shift towards corporate partnerships for funding programs. Gavet stated that the corporate programs have been a critical competitive advantage for the organization and will continue to be so.
Uncertainty and Future Prospects
One open question for Techstars is the state of its own fundraising. While the company raised a large round in 2019 and closed a $150 million fund in 2021, the status of a second $150 million fund remains unclear. The future performance of Techstars in backing startups that grow quickly and achieve successful exits will be closely monitored, especially in the face of competition from other accelerator programs.
