David Cohen is the founder and co-CEO of Techstars. He has founded several companies and has invested in hundreds of startups such as Uber, Twilio, SendGrid, FullContact, and Sphero. In total, these investments have gone on to create more than $80 billion in value.
Prior to Techstars, David was a co-founder of Pinpoint Technologies which was acquired by the publicly listed ZOLL Medical Corporation in 1999. Later, David was the founder and CEO of earFeeder, a music service that was sold to SonicSwap. He’s also the co-author (with Brad Feld) of Do More Faster; Techstars Lessons to Accelerate Your Startup.
Techstars today has 49 accelerator programmes in 35 cities across 16 countries, including in Paris, Berlin, London, and Lisbon. It invests €72 million into nearly 500 startups annually. Last week, Techstars announced they just raised €38 million to accelerate even more startups in Europe and across the globe. A good timing for an interview with Techstars founder and co-CEO David Cohen.
David, please take us back to the very beginning of Techstars. How did it all start and how did the Techstars model change over time?
Brad Feld, David Brown, Jared Polis and I started Techstars in order to create a better way to do early stage tech investments as well as to improve our local startup community in Boulder, Colorado. I pitched Brad Feld on the concept early on and he committed to invest in our first 10 minute meeting. We then recruited experienced mentors and in our first year had 302 applicants. Of that first group of 10 companies, 5 had successful exits (and one of the other five is still thriving today). We then began scaling the platform to what you see today, given the impact on the communities and the success of the approach. In 2012 we increased the amount of capital we invest per company to todays figures, and started doing corporate partnerships (our first one was with Microsoft to power their Kinect and Azure accelerators). Today we work with around 100 corporate partners. In the last year or so, we’ve launched several new products alongside our accelerators like Techstars Studio, Techstars Talent, and Techstars Ecosystem Development.
Can you share some numbers about the current state of Techstars? Like number of startups, raised capital, number of exits, etc?
See techstars.com/companies – it’s always up to date – we’re very transparent here. Skip past the top 50 companies to see stats. At the moment, about 7.9 billion in capital raised. 186 exits by M&A/IPO. 1,759 companies that finished Techstars (another few hundred in programs now globally). Their enterprise value is about 22 billion. Check the page mentioned for more stats/data.
What differentiates Techstars from most other accelerators out there. Why and which startups should apply at Techstars?
Our network is global. We have activity in 120 countries annually, with accelerators in 16 countries. 10,000 mentors. An enormous talent network. I think our track record also differentiates us significantly. And, instead of us trying to fund 100+ startups in one room, we fund just 10 in a consistent model in each community that we participate in.
What would you say are the main differences between the US startup ecosystem and the startup ecosystems in Western Europe? What are some of the major changes you are spotting?
In some cases there are still significant regulatory differences. We run into challenges in some countries with very high legal costs, challenges with employment structures, etc. These seem to be heading in the right direction, but unfortunately today you still can’t think of the EU as “one market” – there are significant operational complexities to invest throughout Europe that still create challenges. However, it’s amazing to see the growth in early stage funding that is available – this is quite healthy now.
How important is location for the success of a startup. Would you recommend startups to move to one of Europe’s leading startup hubs like London or Berlin, or maybe even to Silicon Valley?
No. We believe that more and more, great startups are being created everywhere. As long as you have a vibrant startup community, you don’t need to move away. Live where you want to live. This is part of the freedom of entrepreneurship.
You just raised €38 million for Techstars to accelerate even more startups in Europe and across the globe. What are your plans and goals for the next 3 years?
We’ve been consistently profitable since inception which has allowed us to get to the scale that we have today. This cash injection won’t be used to invest in startups (we have $500M AUM to do that), but rather to scale our footprint and product offerings. We’ll certainly want to grow to more European locations over the next few years, perhaps doubling our existing footprint in that timeframe. But we’ll also be offering more resources to our founders and partners, such as Techstars Studio, Techstars Ecosystem Development, and Techstars Talent, in the region.
What is your take on equity crowdfunding as an alternative or additional funding source for startups. Do you think it will become more relevant over the coming years?
I’ve always believed it’s a nice add and we’re supportive of it. I think it’s reached a more or less steady state, where some startups are able to add on a bit more capital if they want more of the “crowd” involved.
Could you recommend our readers one or two books that helped you during your entrepreneurial endeavors?
Well, we just released the 2nd edition of “Do More Faster” that I wrote with Brad Feld, and of course new to the Techstars series of books is also “Sell More Faster” by Amos Schwartzfarb. Outside of self promotion, I’m a huge fan of “The Soul of Money” and “Zen and the art of motorcycle maintenance” for entrepreneurs.