Not to hype this too much, but TechStars coming to town could be the rallying point for a new generation of high-tech entrepreneurship in Seattle—the likes of which we haven’t seen before. At least, that’s the word from two of the main investors responsible for bringing the tech startup program here. (By now, most of our readers know about Boulder, CO-based TechStars, but in case you missed it, here are some stories from earlier about the seed-stage investment fund’s expansion to Boston and Seattle.)
This is the latest intriguing concept we’ve seen from VCs who are going back to basics by focusing on early-stage companies and creating a central nurturing environment (including office space) where entrepreneurs can network among themselves and, most importantly, get mentorship from more experienced people. Polaris Venture Partners, for one, has done this with Dog Patch Labs in San Francisco, Boston, and now New York. Seattle-based Accelerator is one local example where a similar concept has worked for early-stage biotech companies.
Andy Sack, executive director of the new Seattle program, gave me some historical perspective on the tech scene. When he moved to Seattle from Boston in 2000, he says, “there was next to no entrepreneurial infrastructure.” There were investors and startups, sure, but there was no main café to meet at, no hangouts, none of that. In Sack’s view, things have changed a lot in the past three years, for the better. But, despite a lot of grassroots efforts to support tech entrepreneurs, “nothing has really pulled the community together,” he says. Providing that kind of supportive environment, where entrepreneurs can make connections and really think, is one of the key ideas driving TechStars. (Sack, a serial tech entrepreneur and investor, didn’t say yet where TechStars will be located physically.)
“Seattle needs that because it needs to come together to support fledgling seed-stage companies,” he says. It sounds a lot like the motivation Sack had when he and Chris DeVore started Founder’s Co-op, a seed-stage fund and mentorship program, in 2008. Yet TechStars promises to be more than that.
“There hasn’t been something like this in Seattle, or even in the Valley, where literally the entire investment community has come behind something and made it work for startups,” says Greg Gottesman, a managing director at Madrona Venture Group.
What I hadn’t fully appreciated is that virtually every tech investment firm in town has signed on to a three-year commitment to put a small, separate fund into TechStars. That includes everyone from Madrona to Ignition Partners, Voyager Capital, OVP Venture Partners, Maveron, Buerk Dale Victor, Draper Fisher Jurvetson, Second Avenue Partners, Trilogy Partners, and WRF Capital, to prominent angel investors such as Linden Rhoads from UW Tech Transfer. Plus heavy hitters Jeff Bezos and Paul Allen are also behind it. (No word yet on whether Bill Gates is in.)
It’s not a lot of money—the fall 2010 session will host about 10 companies (mostly Web focused) with $18,000 max each—but it shows a real commitment to making the program work. “You put it on your books and you’re committed to it,” Gottesman says. “It’s not, ‘Maybe I’ll show up.’ They’re putting money and time into it.” He adds, “Everyone thinks the timing is right. It’s a shot in the arm for really early-stage startups. “
TechStars doesn’t like to be labeled as an “incubator”—probably because so many of those operations have failed—but its essential function is to nurture very early-stage companies along until they can raise enough money to stand on their own feet. If all goes well, local venture firms will be competing for access to the best startups that emerge from the program. To this end, it sounds like a lot of investors around town had to put their egos aside for the greater good, to make the program happen.
“We didn’t want it to be a Madrona thing. We didn’t want it to be a Founder’s Co-op thing.
