Startup accelerator TechStars is announcing a new 'equity back guarantee'. The mentorship-driven program - based in Boulder, Colorado - has grown and expanded into other cities including New York City, Boston, Seattle, San Antonio, Austin, Chicago, and London. Companies that make the program give up 6% equity in order to gain access to the experience and and connections of the TechStars network. They're so confident, that starting in 2015 they are willing to return the equity if startups aren't completely satisfied in the value exchange.
The group is already highly selective and accepts less than 1% of the companies that apply. However, they can only select from those that actually do apply. While the founders of TechStars say the value is clear for graduated companies, they want to attract even more high-quality applicants who may be hesitant before getting to know the program.
In Brad Feld's post on the matter, he writes about living out the "give before you get" philosophy. He then concludes with lighthearted confidence, "While I wish my lawyers, accountants, and investment bankers offered a money back guarantee, I accept that isn’t changing anytime soon. However, I encourage all accelerators and entrepreneurial service providers to consider offering this. After all, our mission is to help entrepreneurs."
TechStar's Announcement can be be found at http://www.techstars.com/equity-back-guarantee/
Today Techstars is announcing an equity back guarantee that goes into into effect for all companies participating in a Techstars program starting in 2015 and beyond. The reason for this is quite simple. We firmly believe in the value of the Techstars accelerator program and in the long term value of our network. This makes it easy to take this step to “put our equity where our mouth is.”
Over the years, but especially now that we’ve scaled up to 13 different locations, we’ve seen more companies coming to Techstars not only for our accelerator program but also to leverage the ongoing value of the Techstars network. Techstars is now a massive interconnected network of over 3,000 successful entrepreneurs, mentors, investors, and corporate partners. That network value lasts a lifetime, whether you’re starting your first company or your fifth.
Some of the founders we’ve funded over the years have been skeptical of the value of Techstars on the front end. Most of those ended up talking with the alumni of Techstars and ultimately got comfortable and made the leap of faith. But we’ve noticed a very clear and consistent pattern: they’re never skeptical of the value after the Techstars program ends. In fact, they tell us consistently that it was completely worth it. The equity back guarantee completely removes this up front concern that some may have.
Now, if you’re a founder who wants to get efficient and focused feedback, challenge yourself to be better, build your network, and leverage the massive Techstars network, you can do it in a completely risk free way. You can participate in Techstars under our standard terms, which now includes this equity back guarantee for every single company. At the end of the Techstars program, your company will have 3 business days to lower or eliminate our equity position if they’re not satisfied with the value of Techstars.
In the Techstars tradition of #givefirst, we’re proud to offer our equity back guarantee to ensure that every company we work with is completely satisfied with the value that we provide. We hope to see your company applying to Techstars soon. You quite literally have everything to gain, and nothing to lose.