David Brown has seen a lot of startups come and go in the nearly 10 years since he co-founded Techstars. When he told us he thinks New York is rivaling the Bay Area as one of the best places for entrepreneurs to be, we couldn't help but ask him to sit down with us and talk about the state of NYC tech and what's coming out of Techstars next.
“Absolutely I think New York is a contender to Silicon Valley," Brown said. “I think there are a lot of businesses that don’t want to move to Silicon Valley. They want to be in New York and our job is to make an equally great if not better alternative.”
Brown is the managing partner of Techstars, the startup accelerator program he founded with CEO David Cohen, Brad Feld, and now US representative, Jared Polis in Boulder in 2006. Techstars pioneered the accelerator approach — a program where a group of about 10 startups get funding, office space, and professional advice and mentoring from experienced entrepreneurs over a three month period. At the end of the program the graduate startups pitch to a group of potential investors.
3 Techstars Programs in New York
Techstars runs 19 separate programs in cities around the world, including three in New York City, and has since inspired hundreds of accelerators to run similar programs. Brown says Techstars came to New York to help expand the Techstars philosophy to the largest tech centers around the world. “We believe in building global ecosystems to connect entrepreneurs with each other and a network of investors, corporate partners and markets worldwide," he said. “But New York in particular has many successful startups and lots of accomplished entrepreneurs and investors who were willing to participate in the program, so it was very much a natural choice for us.”
Though Techstars runs roughly the same model in each of the 19 programs, Brown is keen to emphasize that each program has its own unique personality.
“Techstars is not a franchise," Brown said. “The different people running the programs, who the mentor base is, which startups come and where they are based all contribute to them being slightly different from each other.”
Brown said the potential for scale in New York, and the number of mentors, advisors and investors makes the city’s programs unique. “New York is such a centre of gravity that doesn’t exist everywhere," he said.
In addition to the NYC program, Techstars has a FinTech accelerator in partnership with Barclays and an IoT (Internet of Things) program with PWC. The Barclays NYC program had its first demo day on Oct. 8 and the IoT program, which was just announced earlier this month, will launch sometime in 2016.
The partner companies support the programs, but do not get first pick or any special rights to investing in the graduating startups. “If there’s a corporate partner, that partner may want to be one of those investors but there are no preferential terms, or priority or obligation," Brown said.
"An idea and a dog"
The type of entrepreneur entering these modern programs has changed radically since the first program in Boulder.
“In the early days it was more about two people in their twenties with an idea, and a dog”, Brown joked.
Since then, he says the average age of the entrants has drifted up and more businesses are entering at all stages. Of course, the types of products being produced are also vastly different. There was no iPhone when Techstars began and Facebook released their first API during the initial Techstars 2007 class, which created a whole new business opportunity for the startups. There are also now more than 5,000 current and former graduates, mentors and investors in the worldwide Techstars community and a lot more money being invested.
Is there a bubble?
Brown isn’t overly concerned about venture capital creating a second tech bubble, even if he admits some valuations seem high. He acknowledged that at some stage there will be a downturn, capital will leave the system and valuations will drop, but said that even then new entrepreneurs will be needed.
“We’ll see valuations go down when that happens, but we don’t tend to worry about that," he said. “We’re just trying to find great entrepreneurs to invest in and not over optimize on the details of the evaluation.”