

TechStars Raises Fresh $24 M, Offers New Startups $100K Each - cienrak
http://www.betabeat.com/2011/09/21/techstars-raises-fresh-24-m-offers-new-startups-100k-each/

======
sama
The reason the Start Fund works is that the terms are so good--uncapped and no
discount--that if you're planning to raise money at all, you should take it,
and so the investors get a real index, including the potential home runs.

These terms are significantly below the mean for the last YC batch, and I'd
bet that some of the best startups don't take the deal. It's a decidedly less
clear strategy to invest in only the not-so-good startups in a batch.

------
jot
_"Y Combinator started the year before us, and it’s the same genre, but under
the microscope, we could not be more different," said Mr. Cohen. "The
fundamental difference between us and the other accelerator programs is they
have a black box, while we have open sourced our model."_

TechStars and YC are certainly different but having read:

What Happens At Y Combinator: <http://ycombinator.com/atyc.html>

and the TechStars equivalent:

Do More Faster: <http://www.domorefasterbook.com/>

YC doesn't seem like any more of a black box than they are.

~~~
mkrecny
Cohen is referring to the fact that TechStars is essentially a franchise and
YC is not.

~~~
jedc
And that the first month of TechStars is a lot of back-and-forth, matching
startups with mentors and mentors with startups. Where all three months of YC
is build, build, build. (And getting ready to demo.) To stretch an academic
metaphor, TechStars reminds me of a residential college (where you do
everything with your cohort) and YC reminds me of the traditional Oxbridge
model (some lectures, lots of independent study and regular one-on-one
sessions).

Neither is particularly "right" or "wrong", they're just different models.

------
e1ven
This is excellent news, and a good alternative to YC.

Because of the Yuri/Conway offer, YC had been a substantially more financially
viable program for a lot of startups that need capital to get moving- This
helps level the playing field.

While I love YC, competition in this space is good for everyone.

------
sbisker
It feels like the amount given to incubated startups is creeping up, both in
YC and now in TechStars, as the programs have gotten more popular.

Do people no longer feel that "the amount a graduate student makes for three
months" is enough to actually start a company? Or is this more reflective of
the market value rising for the amount of equity typically taken by a top
incubator? If it's the latter, wouldn't there be a new opportunity for an
incubator to give grad student wages to willing companies for a much smaller
equity stake?

~~~
patio11
So you know how startups are a star search with returns dominated by whether
you invest in Google/FB/etc? This is apparently pretty true for YC as well:
the AirbnBoxen/Dropboxes will swamp most everything. Given that everyone is
trying to invest in that one best startup this year, the prior valuations of
"we guess the best starup will be in this pool" are pulling away from the
generic "two guys with a gleam in their eye" ones, as a consequence of market
participants reacting to YC et al being ridiculously better at picking winners
than previous screening mechanisms.

Yay capitalism, by the way.

------
0x12
Someone should do a side-by-side comparison of the batting averages of all
these incubator programs and their respective terms.

~~~
joshfraser
Here is the TechStars data. Anyone know if YC has published their results
anywhere?

<http://www.techstars.com/companies/results/>

~~~
akharris
I'm intrigued by the fact that the piece highlighted by techstars is simply
the number of companies acquired (along with founded, active, and failed).
That shouldn't be the metric of success for a company.

I founded a startup to build a big scaleable business. If I end up selling,
then it will only be a success if the acquiring team, the impact to our
vision, and the economics are all excellent.

If I wanted to compare the incubators, I'd want to see relative user bases,
revenue generated, valuations, etc. The proof is in the pudding, and that's
the pudding.

~~~
jedc
I believe their results page is largely automated based off of Crunchbase
data. From what I understand it's not necessarily their metrics, but just the
ones that people ask about and are fairly easy to access. (Particularly since
what you're asking for is sensitive/confidential info!)

~~~
snprbob86
Yup, you're right: the data is automated by CrunchBase. It should also be
noted that fundings, exits, etc are under-reported, as CrunchBase is generally
a little bit behind for two reasons: 1) Not everyone keeps their companies up
to date 2) Some people don't want to make much noise with their financial
events

------
devongall
The names on the funding aren't quite in the Ron Conway, Yuri Milner realm -
access to that network is one of the most important pieces of Startfund for
follow-on, BD, etc.

That said, it's still awesome to see expansion in funds available for early-
stage companies.

------
rglover
It's great to see a lot of incubators really coming to life recently. What's
even better is that entrepreneurs have _options_. If you agree with one ethos,
you can apply there and if not, look for someone else. My only hope, though,
is that this becomes a staple in business and not just a fad. I also hope that
the quality of these incubators remains extremely high and that they continue
to select companies with a fine tooth comb. Congrats to TechStars for moving
forward.

------
arthurgibson
Its great for startup companies, now they just have to worry about executing
in the first year. I do think they will miss a lot of the struggle and
hardwork in fundraising, but as pg says thats just a time sink. One jab: Whats
better than 100K...150K

------
andrewhyde
Great news for more quality startups to be founded.

------
cienrak
How are these terms different than what goes on with YC and StartFund? Better
or worse?

~~~
adaugelli
The $100k is a $3m cap with a 20% discount [0]

Assuming the companies seed round prices above $3m, it's an additional 4%
dilution to the company (bringing total initial dilution to about 9%)

[0]
[http://www.readwriteweb.com/archives/techstars_nearly_matche...](http://www.readwriteweb.com/archives/techstars_nearly_matches_ycombinators_new_money_de.php)

~~~
pospischil
Seems to introduce some signaling issues...

The stronger the company, the less likely they are to accept the note at a 3mm
cap.

~~~
devongall
Agreed - seems like the terms could potentially defer the top-quality
companies (although most would be happy to have the $ in their pockets), while
the start-fund structure makes it attractive to any stage.

I'd hope the money is elective though, as that would certainly solve the
problem.

------
speedracr
Regarding transparency: TechStars New York is currently on Bloomberg as a
series, albeit quite some time after the fact (e.g., Toviefor folded just
weeks after TechStars ended & is one of the featured startups).

HN link (submitted by me): <http://news.ycombinator.com/item?id=3021939>
video: <http://www.bloomberg.com/tv/shows/techstars/>

------
kcurtin
The discovery of these incubator models is one of the most interesting things
happening in the startup community - in addition to giving aspiring
entrepreneurs an opportunity to build great things, they are creating an even
more tightly knit startup community. They are making it easier for new people
to get involved in this network/community, who in turn give back because they
have such a great experience.

