
TechStars 2007 - Funding program & seminars (similar to YC) in Boulder, CO - lost-theory
http://techstars.org
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pg
Similar to the point of plagiarism in some respects (there are only three
questions on their application form not copied from ours). But there are some
differences:

1\. They have an official connection to VCs. No one in seed funding can afford
to do this, because it means you hose 90% of the companies you fund. If you
don't give them their next round, no other VC will either, because you had
inside info and you didn't.

2\. They make no promise to keep doing this after this summer. YC and its
network of other startups will be there to help you a year from now.

3\. They give lower valuations: $12.5k for 5% in the average (2.5 founder)
case, vs $17.5k for 6%.

4\. At the end you demo to investors in the #6 startup market, whereas at YC
you get to demo in both #1 and #2.

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rms
With the identical application, it doesn't hurt to hedge your bets and apply
to them as well as Y Combinator. They've got nothing over YC but it's
certainly a viable alternative.

Can you clarify the line about inside info and how the Tech Stars program
could be bad for a company's future VC funding?

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pg
If a seed firm has an official relationship with a VC, that VC will know which
of their startups are best. They can't invest in all of them, since the number
of startups is so much larger at the seed phase. Any they don't invest in,
other VCs will know are rejects. And this is the kiss of death, because the
most important thing to most VCs is other VCs' opinion.

Both Techstars and the new Lightspeed thing have this problem. At Techstars
one of the founders is a VC, and Lightspeed is itself a VC firm.

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rms
It's bad if you come out of the Techstars program without any funding and a
non-sustainable company, but then you're probably screwed anyways. VCs are
infamously inscrutable; we hear that they are always out to take advantage of
naive or underfunded companies.

If you're good enough to get further investment after Techstars, you get it
from a VC that you already know instead of having to deal with the typical
painful negotiations. And if Brad Feld's Foundry Group will give you money,
maybe you could get Bay Area VC money. Even better, the best companies will
get to reinvest their own profits.

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danw
Hypothetical situation but what would happen if a startup participated in
TechStars or another program and then afterwards applied to YC? Would previous
experience increase chances of application success or would they be passed
over because it would seem they've already been given a chance?

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pg
We'd consider them. We have sometimes accepted companies that have already had
a little funding. We prefer companies that aren't incorporated yet, though,
because the paperwork is so much simpler.

