make that do something cool and new. And that’s, broadly, the interface between reality and virtual.”
On the topic of TechStars itself, I noted that the program had recently announced a new investment program for its startups: A syndicate of VCs have put together $24 million that will be used to offer each new TechStars company an additional $100,000 in the form of a convertible note, on top of the $6,000 per founder (up to $18,000) that TechStars already gives its startups in exchange for a 6 percent equity stake.
The startups onstage this week weren’t sharing in that new fund, since it doesn’t take effect until the 2012 classes (this year’s Seattle companies, it should be noted, had already raised a combined $3.5 million already heading into the demos).
The new fund, of course, signals increased competition among the top-tier incubators. Silicon Valley-based Y Combinator in particular announced a program earlier this year in which every single startup could borrow $150,000 from Yuri Milner and Ron Conway at very favorable terms. The TechStars fund was announced in September, just as the new Seattle class was getting under way.
Cohen has said that TechStars’ new fund could get a broader slice of entrepreneurs to consider the program, since it takes some early fundraising headaches out of the picture.
But in our interview, he also pointed out that TechStars differentiates itself in other ways, primarily by gathering a large group of entrepreneurs, investors, and executives to act as mentors for the startups.
“I go back to community. There are other programs that have a fund or a person that throws some money at them,” Cohen said. “What makes TechStars unique is the community … versus a sort of closed, it’s just one VC kind of deal. And we’re very, very conscious of that. I think it’s really different.”
When I asked Sack for his take on the big changes from year one to year two, he immediately put his own performance as a leader under the microscope. “I ran a better program this year than I did last year,” Sack said. “I knew timing. I knew what to expect. I knew when to lean in.”
For the startups, that meant the director wasn’t going to treat them with kid gloves—a change from a year earlier, when Sack says he felt more of a drive to treat all the companies equally.
“This year, I told them exactly what I was thinking. I compared them to each other all the time,” he said. “And the reason I did that is because everybody in this room—you just heard 10 pitches—is like, ‘Which one is my favorite? Which one presented the best?'”
“And everybody’s always doing that. So I was much more vocal about my feedback. And that’s a concrete example of me consciously running the program different,” Sack said.
“In addition, you’ve got investors who now know what to expect from the program and mentors who now know what to expect from the program. All that in a broad context of the TechStars brand growing—you get more applications,” Sack said. “It’s the whole cycle.”
