Members of the Techstars community, like those pictured, will have the opportunity to launch new ... [+]
One of tech's most recognizable startup accelerator programs is getting in on the rush to try a new model of company creation: the startup studio.
Techstars announced on Wednesday that it's launched Techstars Studio, a program to "co-create" companies through its network of entrepreneur alumni and corporate partners. Based out of Techstar's home base of Boulder, Colorado, Techstars Studio will be led by Sendgrid cofounder Isaac Saldana and Mike Rowan, formerly a vice president of SendGrid Labs.
The startup studio has already signed up the support of more than 25 corporate partners and advisors, Techstars co-CEO David Cohen says. The goal: to help match entrepreneurs from Techstars' extensive alumni network to startup ideas, or help them spin out ideas from corporations that might give up intellectual property in exchange for equity in the new venture.
"It allows our alumni to find the next thing through Techstars," Cohen says. "They want to leverage our brand and resources as they look. And the corporate partners were saying, 'We love running these accelerators with you, but we have some of our own ideas. You know all these entrepreneurs. Can you help us find the next people who can come and work on this concept?' So we were hearing it from both sides."
Eleven years old, Techstars has long partnered with big corporations to support startups within certain themes through branded accelerator programs, such as Amazon for voice tech, Comcast for media and GE for the Internet of Things. The network manages about 50 accelerators today across 14 countries. Like other accelerators, Techstars takes equity from the founders that participate in its programs in exchange for office space and access to its network. At Techstars, startups give up 6% of their company in exchange for a $20,000 stipend and are separately offered a $100,000 convertible note. The program lasts three months. (Disclosure: I volunteered to be an uncompensated mentor for a Techstars program in the past.)
The startup studio takes a different approach by looking to get involved in the conception of a company itself. Techstars and its partners who help match cofounders to projects, or contribute IP to get them started, would likely expect far more ownership of the company in exchange.
The allure of equity closer to a co-founder's stake, as well as the ability to test and vet ideas for commercial viability before investing much time in any particular one, has helped make startup studios a rising trend within venture capital and the startup ecosystem. Perhaps the most successful studio to emerge in recent years is Atomic, a San Francisco-based studio behind companies like Hims, TalkIQ and Terminal. The idea itself isn't new: Betaworks in New York has operated for years, as has Pioneer Square Labs in Seattle, which recently raised a fund. The idea can be traced as far back as IDEO, a design firm in Silicon Valley that helped popularize the idea of batch startup creation. (IDEO's founder would more recently partner with a large VC firm on a similar idea in 2013; that concept is now a "design mentorship program, according to its site.)
At Techstars, Cohen says the team has learned from Pioneer Square Labs, in which it invested, as well as other efforts like High Alpha in Indianapolis, which has launched startups like Zylo and MetaCX. Techstars will negotiate each equity agreement with founders on a case-by-case basis, he says. Moreover, the program will offer a centralized team of full stack engineers, marketers and designers based in Boulder to support the projects over their first year.
Founders who might use the Techstars studio program could be serial entrepreneurs looking for their next project, or founders still working on their startup who have secondary ideas but need others to run with them, Cohen says.
But it remains to be seen whether top-caliber entrepreneurs will find Techstars' and its partners' assets valuable enough to give up ownership so early into the company. Like other studios, Techstars' program will have to work to attract top quality founders who might be tempted to simply work on similar ideas on their own.
Techstars plans to launch four or five startups in the first year of the program. Cohen insists there's already significant demand. "It's a way to invest and leverage the talent of the Techstars network," he says. "We are excited to see it and get started. We think we are pretty differentiated on both those fronts."
