Business Incubator Series: An Interview With David Cohen, Founder And CEO, Startup Accelerator TechStars – Boulder, Colorado (Part 3)

By guest authors Irina Patterson and Candice Arnold

Irina: What are your mentors’ relationships with the companies? Is there compensation involved?

David: No. No compensation. Many of them will go on to be investors or advisors long term. That’s the natural outcome. At the start of the program, the mentors work for free. The reason they do this is that they want their entrepreneurial ecosystem to be better.

What is the motivation of a mentor? Wanting their community to have more interesting startups is one motivation. Another is the social dynamic is working with five or 10 other great people, like yourself, on an interesting company.

You get a social dynamic with the other mentors that is unique. Maybe you know some of these people, but chances are, you don’t know all of them that well. You’re all focused on this one company together, trying to make it successful in a short period. It’s not a year-long ask. That’s the second thing, the social dynamic.

The third thing is that while many of them are investors – some are angels, some are VCs – many of them are just operating entrepreneurs.

For the ones who are investors, there’s obviously a deal flow dynamic there. Because TechStars is so open and does not have a fund directly behind it and doesn’t lock up the investments before demo day, it’s an open environment to work with these companies and possibly make an investment.

Different mentors have different motivations. Those are some of the common ones.

Irina: What are the sources of your applicants?

David: Roughly, 10% of our applications are from outside the United States. Roughly a third are from whatever the local market is. So, in New York, for example, roughly, a third would be from the New York metro area. The same is true in Boulder and Seattle and Boston. The other 50% to 55% are widely distributed from across the United States.

Irina: On average, how many applications do you receive for each enrollment?

David: We’re averaging around 650 companies applying per program. That varies by city a bit. We’re seeing right now, just over 2,000 unique applications per year. Some of those are applying to multiple cities, obviously.

Irina: And only 10 will be accepted, right?

David: We have a little flexibility on that. We don’t like to be so rigid. It’s, generally, 10, but if there’s an 11th we feel is just as good, we’ll take 11. We’ve done that a couple times.

Irina: How do you process your applications?

David: It’s quite a long process. The applications come in, and I usually describe the funnel as roughly half of the applications just aren’t a fit. They either don’t have enough progress on the prototype, or they don’t have any demonstration of talent in their past projects, or they don’t have a team that’s interesting, or the market is just totally not what we do. So, we’re able to screen about half the applications through the application process.

We then, through a series of e-mails and phone calls, narrow down to around 100 companies. That’s the job of each local managing director.

Each of the four TechStars cities has a managing director who’s an experienced investor in his own right. Again, they get it down to that level by doing the phone call and e-mail screening.

They then present those 100 companies to a committee that’s made up of the managing director, me, and some of the investors in that particular city, who then get down to about 30 finalists. We spend a lot of time with those 30 finalists and then pick 10 companies. It’s quite a long process.

Irina: Do the 30 finalists have to come to the city in order to present?

David: No. We will often travel to them. In some cases, we’ll pay them, you know, reimburse them, to travel to us. It just does it much more efficiently. If there are three finalists in Chicago, often we’ll go there and do interviews in the airport. That’s quite typical.

Occasionally – very rarely – we actually never do a physical interview. I’d say that’s happened only once or twice out of the 80 companies.

This segment is part 3 in the series : Business Incubator Series: An Interview With David Cohen, Founder And CEO, Startup Accelerator TechStars – Boulder, Colorado
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