Boulder-based Techstars, one of the best-known tech accelerators of this century, is leaving Colorado for New York, a move that startled some of its local community.
“It’s like McDonald’s is closing its first restaurant,” said Scott Yates, a serial entrepreneur who has been a mentor for the Boulder program “since the days TS was in an office upstairs from the imported Tibetan gift shop.”
The business accelerator launched its first program in 2007 to help technology founders hone their craft and business plans, pivot, if necessary, and make a pitch on Demo Day to raise capital from investors. Since inception, more than 4,000 startups and 9,000 founders from all over the world have gone through Techstar programs in multiple states and countries. They’ve also raised $26.6 billion in funding, according to the company.
Techstars was a major contributor to building the local entrepreneurial ecosystem that made Boulder and Denver among the top startup cities in the U.S.
“Because they’ve been so successful, there’s an accelerator out there under every seat cushion,” said Luke Beatty, another mentor since the start and also an investor and cofounder of digital asset manager BrandFolder, from Boulder’s class of 2013. “And those are mostly modeled after YC (Y Combinator) and Techstars. There’s still a lot of other places for local people to go to, combined with the fact that a lot of things are remote anyway.”
Techstars 2.0, as the company called itself in a statement posted on its site Wednesday, isn’t leaving the tech world or the niche it’s created. It’s just moving its headquarters out of Colorado and ending accelerator programs in a few smaller cities, including Boulder. Techstars CEO Maëlle Gavet, who joined the company three years ago, lives in New York.
In an email obtained by The Colorado Sun, managing director of the Boulder program Malte Witt said Techstars is concentrating on a few core markets “with deep infrastructure of robust VC communities, large talent pools, and significant numbers of other early and late-stage startups.”
That, apparently, excludes Boulder. And Seattle. Those two programs are ending after their last cohorts this year, a Techstars spokesperson confirmed. The core markets are all coastal — San Francisco, New York, Boston and Los Angeles. The virtual “Techstars Anywhere” program would also continue, according to the note.
In an emailed statement, Techstars said it remains proud of its Colorado roots but “New York is the second largest — and growing — startup ecosystem globally, and we want our headquarters to be in one of the epicenters of the startup world with more funding, connectedness, talent, knowledge, and market reach.”
The company will continue to be the title sponsor of Boulder Startup Week and recently opened an office in downtown Denver where local employees will still work. The company is also working with the governor’s office to accelerate the commercialization of quantum technology, which “would likely result in additional Techstars accelerators,” it said.
How it started
Techstars is the product of venture capitalist Brad Feld and cofounders including Gov. Jared Polis, a tech entrepreneur himself. Feld left Boston for Boulder in the 1990s and started a new venture firm, the Foundry Group. It showed the world that a venture capitalist didn’t have to be based on either coast.
When they joined David Cohen and David Brown to start Techstars in 2006, the social media industry was just getting started. Twitter had launched the year before, and Facebook three years earlier, if you count inception with TheFacebook while cofounder Mark Zuckerberg was in college. Its first cohort in 2007 had founders from 10 companies spend three months in Boulder.
Over the years, Techstars and its #givefirst motto helped founders connect and support one another. The community attracted more interest and paved the way for Denver Startup Week, which became one of the biggest free events nationwide. Other venture funds and investors took notice and started coming to Colorado to invest, instead of forcing startups to leave Denver and Boulder for Silicon Valley and the coasts.
Mission accomplished is how Dan Caruso looks at how far the tech ecosystem has come since he cofounded Level 3 Communications in the 1990s and later started telecom Zayo Group in Boulder in 2007.
“Tech companies are moving to Colorado because you can attract talent locally and talent moving to Colorado. Talent wants to stay in Colorado,” Caruso said. “The ecosystem in Colorado is so much more advanced than it was in the past and there’s no question that Techstars thrived in Colorado even when it was a lesser market and it could continue to thrive in Colorado if it chose to.”
He feels Techstars is moving to New York because that’s where its CEO lives. The move may not seem like a big change in the modern age of remote work, but it’s still a big deal for locals and he said understands why some folks feel shocked.
“It’s a bigger deal because there’s a lot of pride that Techstars was born in Colorado and became a globally recognized brand,” he said. “I think it’s good for Colorado to always react in a way that says we do not want to lose our great companies. It does go to show how important it is for states and cities to embrace the leaders of the business community and give them reasons to stay and grow in Colorado. Because when you lose a valuable asset like that, the state loses the opportunity to create jobs and the opportunity to help people launch their careers and, in this case, to launch a new business.”
Boulder’s big impact
Colin McIntosh, founder and CEO of Sheets & Giggles, can relate. He went through Techstars twice. The first time in 2015 with Revolar, which developed a personal safety device. And the second in 2019 with the sustainably-sourced bedsheet company, which struck a chord with customers, so he’s still at it.
“Sad news for sure,” McIntosh said in an email. “The Boulder program changed my life (twice!), and I’ll be paying it forward for a long time to try to pay off that debt.”
Techstars graduates went on to build a handful of billion-dollar companies like transactional email delivery platform SendGrid (Boulder class of 2009), cloud computing system DigitalOcean (Boulder class of 2012) and package-delivery company Veho (Boulder class of 2019). SendGrid stuck around the area and moved its headquarters to Denver before being acquired by Twilio for $2 billion in 2018. And Veho, which has raised $300 million in venture funding, had a $1.5 billion valuation after its last raise two years ago.
It’s funny to think that Veho was just a five-person startup in Boulder less than five years ago. Now it employs 900 people, including 60 in Colorado.
“Veho benefited significantly from the exposure we got from doing the Techstars Boulder program in 2019 and though our company is now national, we have a significant employee presence in Colorado today because of our roots here,” emailed Fred Cook, Veho’s cofounder and chief technology officer. “It is definitely a loss for the CO ecosystem for this program to stop running.”
But he feels it’s the right move. Veho happens to be based in New York so he’s looking forward to helping out locally.
“I can definitely attest that the significantly larger entrepreneurial ecosystem in the larger metros provides much more access to talent and capital, and as a founder, that definitely makes those larger city programs (have a) higher impact for a company at the earliest stages. Like any customer-centric company, Techstars is making the right move for founders here, and I applaud them for making the hard choice!”
While Techstars is moving and Feld’s Foundry Group is ending its run, it seems like the end of an era. But new entrepreneurial communities continue to sprout up in Colorado. Last year, the state was named a Tech Hub for the quantum industry. While scientists and researchers have been working on quantum physics and precise sensors for decades in the Boulder area, the area started attracting companies and manufacturers hoping to commercialize the research.
“As a cofounder of Techstars and a business leader Governor Polis has made it easier and cheaper for Coloradans to start a business and has helped grow Colorado’s economy,” Eric Maruyama, a spokesperson for the governor’s office wrote in an email. “The startup culture in Boulder and across Colorado is stronger because of the legacy of Techstars and the powerful network of mentors and founders that will continue to thrive in our state.”