Techstars, startup the Boulder, Colorado-born accelerator has always found his niche with ease. Unlike perhaps its closest competitor, Y Combinator, Techstars has taken a divide-and-conquer path in supporting early-stage startups: instead of one big batch, it has dozens of dedicated programs around the world, from Tel Aviv to Lagos to Oklahoma. Ridge. Knoxville.
While geographic expansion has been aggressive, Techstars today announced a different way changing the way you invest in startups. Rising Stars is a new pre-seed, pre-accelerator fund led by Saba KarimHead of Startups at Techstars, and Neil Sales-Griffin, managing director of Techstars Chicago. Adhering to the Techstars ethos of building accelerators for under-explored regions, Rising Stars is clearly focused on supporting the underrepresented color founders. In the United States.
The Rising Stars fund has already raised $5 million in funding from limited partners, according to SEC filings, although sources familiar with the matter say the team has closed $8 million and expects the fund’s final size to be $10 million. The foundation’s sponsors include Twitter, Amazon, and the Sandhill Angels. Rising Stars will cut checks by $100,000 in exchange for approximately 7% to 10% ownership, compared to Techstars’ standard accelerator deal, in which it offers up to $120,000 in exchange for 6% of the business. Rising Stars is a more expensive Founders check, but also an earlier one.
It’s amazing that the world of investing in early-stage startups has become so vast and full of money that even accelerators—programs literally launched to help startups get started—want to fund entrepreneurs even earlier. In other words, the earliest ones go earlier. I would say that this change is due to Global tiger effect, otherwise known as the tendency for late-stage investors to write earlier and smaller checks to get targeted property. As a result of more money being funneled into seed and Series A rounds, it may be easier for accelerators and early-stage traditional investors to profit if they start early and find startups before they are ready for Tiger’s terms sheet.
The focus on inclusivity is a hallmark in itself, so it makes sense that Techstars is choosing its first pre-fund targeting those who need it most. “Funding from friends and family is a critical source of early capital for many startup founders… while great ideas can come from anywhere and from anyone, not everyone has a built-in network they can connect to to bring their company to life.” , the company wrote in a landing page about rising stars.
But let’s be realistic: Supporting founders before they’re even ready to name themselves could be a new skill set for Techstars, which has historically supported more established companies. Founding team experience can very intelligently scale back and hopefully redefine investment criteria. Techstars itself is using the new program.
Techstars states that “selection for Rising Stars gives these founders the best possible future exposure to one of our 50+ accelerator programs located across the US and around the world.” Respectively, Techstars teamed up with JP Morgan create an $80 million fund support founders who self-identify as Black, Hispanic and Latino, Native American, and/or Pacific Islander.
Credit: techcrunch.com /