Techstars & Y-combinator: Exactly the right idea.

TechStars received a nice leg up from TechCrunch.

In reading the TechCruch thread I was struck by a couple of thoughts while I was reading the post and the comments.

1. Novice entrepreneurs are extremely easy to spot. They talk about ideas as having intrinsic values in the millions and they're extremely covert and suspicious that everyone will steal their idea.
2. TechStars seem to have nothing but good intentions.
3. I wish there were more adopters of this kind of setup.
   

It's interesting to note how different incubators have been initiated. Programs that take 30% or more in equity with anti-dilution clauses or personally secured venture debt don't make sense for the entrepreneur or the investor. They prevent a company who's really successful from being able to take additional capital and grow.

 
I'm going to give this some more thought. Perhaps I'll see if the TechStar Guru's will let me fly/drive out for a weekend and make friends?

Comments

[David Cohen]

Your post nails it. ;-)

I think the key to both Y Combinator and TechStars is that they are a good deal for both the investor and the entrepreneur. Most first-time founders who get it would do it without the seed funding. They see the value in the mentorship, advice, connections, and access to future funding. They realize the 5% is not really 5%, but will be diluted by a future round if there is one.

It's been interesting to watch how many people view the 5% equity as the central issue. Granted, if you're later stage it makes little sense in many cases. But as you understand, that's not who we're trying to help.

Thanks for the nice post and good summation of what the disussion has been about.

Oh, and if you're in Boulder, by all means come say hi.

[Jeff Barson]

Thanks for the invite David. I might just take you up on that.