It feels like I get 5-10 requests a week now from folks who want to know about my experience at TechStars. The questions are typically the same so while I am happy to talk to anyone who wants to know more about TechStars, I think it might be helpful if I jot down my answers to some of the more common questions here.
So here is Eli's FAQ about TechStars. Feel free to ask more questions in the comments and I will add and answer them to the post.
1 - Is it worth the equity I have to give up?
Yes, absolutely, and without a doubt. TechStars helped speed up our progress by 3x. Most companies go through a stage where they come up with a general hypothesis or idea about what they are going to do and they try it or they look for some form of market feedback and then identify things that work and things that don't. They then improve the idea and go at it again and again until they get to something awesome or they go home. ThinkNear is my second startup so I can draw on the incubation process for my first startup to compare to what it was like at TechStars. My first go around we went through three major iterations of the idea before we got to something that was killer. In total it took us over nine months to get there. At ThinkNear we went through three iterations as well, but we did so in the span of 2 months. We saved 7 months of work by being part of TechStars. Why? Because we had every major potential customer at our fingertips and were able to get market feedback really quickly. We were also forced to talk about our hypothesis on a daily basis to some very smart folks and that helped us identify the holes that we needed to work on before going out and building stuff. Finally, because having a clear deadline by which we had to have everything figured out meant that we worked harder (and faster) than I thought was humanly possible. Oh and the David's pushed us hard to release stuff as quickly as possible.
The rapid incubation phase is a massive benefit easily worth 6%. Assuming an opportunity cost of $15k per founder per month that equals an implied value of $210k for a founding team of 2, and $315k for a team of 3.
Another major benefit is the platform that TechStars provides. After demo day, not only did we get inundated with VC and angel interest but we also got an ongoing wave of inbound BD opportunities and resumes...not to mention lots of press. This is easily worth $100k.
Finally, you get a strong network of advisors and mentors that stay with you for the rest of your companies life, a family of other founders that you can lean on and get support from, and office space and a bit of cash.
In total you are getting somewhere between $300k and $500k of value for 6% of your comany. That is an implied valuation in the neighborhood of $4.5 to 8mm pre-money. Kind of crazy for most startups.
2 - Are all the meetings/events a distraction?
Sometimes, but mostly they are just massively helpful. Getting feedback on our idea and approach from guys like Roger Ehrenberg, Mike Yavondette, Lewis Gersh, Micah Rosenbloom, Mark Suster, Eric Paley, Ed Sim, Rich Miner is just incredible. It helps shape everything we do and gives us access to incredible insights and experience. In real-life getting a meeting with any of these guys would be a massive acomplishment that would take several weeks to get - at TechStars they happen everyday.
3 - What was most helpful about the experience?
The thing about the feedback we were getting is that it was pretty consistent, to the point were even the most arrogant parts of our brains realized that we needed to hone in and focus on those areas. That helped us tackle the hard problems first and got us to build a solution that actually worked rather then leaving the hard stuff for the end and ultimately building something with no shot at success. Feedback is awesome. Firehose of feedback is even better.
4 - Were David Tisch and David Cohen helpful?
Every week we met with David Tisch and David Cohen for at least a half an hour. This was safe-time where we could discuss the mentor feedback we were getting and figure out what made sense and what was worth what we paid for it. These sessions were my favorite part of the week because the Davids were unbelivable at distilling 30 meetings worth of feedback into three action items. Walking into these sessions we felt dazed and confused and we walked out energized and clear on our priorities.
David Tisch also had several hours a week blocked for random office hours which I took advantage of multiple times, mostly to discuss random stuff when I needed someone really smart to bounce stuff off. Sometimes it was challanges we were facing, other times it was help with our elevator pitch, and occasionally it was for comic relief when we would try and rile him up and get him to say something he would regret.
Aside from that they helped with lots of introductions, had great insights, and were incredibely active and thoughtful about our business.
I am amazed at how great our network of mentors is now that we have gone through the program, but the first person I call with good news and bad news is Tisch because I know he has my back and is going to help me figure it out and get back on track quickly. Thats being helpful!
5- I already have [pick one: funding/traction/product/], will I still get value from TechStars?
Great, so then you can focus on the other two that you don't have and make even more progress on them. There were companies with 2+ years behind them when they entered TechStars and they made several years worth of progress in the three months. The value you reap at the different stages of the business are different, but from what I saw it gets more and more valuable.
6 - What is the worst part of TechsSars?
It is a very difficult process. It is personally and professionally challanging to work 18 hour days 7 days a week for 3 months. I had no personal time. I stopped calling my parents. I was away from my wife and kids for weeks at a time. I slept on the office floor for many weeks. I gained weight and I lost some hair. But you know what? I went back to the office this week on a trip to NY and I missed it. It was exahlariting and amazing and I really do miss it.
7 - If you were stating a new company, would you join TechStars again?
If they will have me, absolutely. It was incredible for our business and I cannot imagine how I could ever do it again without David Tisch and David Cohen.
