Techstars 2013 v. 2009

Almost two months ago, I had the opportunity to go to the Techstar’s Community Demo Day here in Chicago to see what the newest class of startups had to offer. There were a lot of great individual presenters and presentations, and I came away impressed with the quality of the companies, but more strikingly I came away surprised at how different the world looks in just four years.

Techstars is a incubator program where startups apply to so that they can be part of a 6 month teaching program that advises the startup on their business model, pitch and multi-year plan. My previous employer, Localytics was a 2009 Boston Techstars graduate, and when I worked there in 2011, we had the opportunity to share office space with multiple Boston classes of startup. Needless to say, I’ve had a lot of opportunities to observe Techstar companies at work.

The 2013 class showed something different than I had seen in the earlier classes though, and seemed to be an incredibly stark contrast to Localytics’ own experiences. Multiple companies had ten or more employees, many of whom had previous startup experience. Most companies had some funding already sourced – some were well over $1 million. A good amount were profitable or had many paying customers and were quickly on the path of profitability.

The 2009 class saw clusters of desks with 3 or 4 people for each company. For a lot of companies, Techstars represented their first significant funding amount. While there were still a good number of individuals who had founded their own companies previously, they were from a different generation of tech startups, mainly from the dotcom era. Most had very few customers, and certainly none paying significant amounts of money or with a lot of users.

What are the reasons for the change? Well somewhat obviously, the economy is doing much better now than in 2009, especially in the world of tech. The increase in success for startups had lead to easier funding (maybe too easy in some cases) for startups and looks like a more viable career path for younger adults who might otherwise be risk adverse. The number of willing workers who have previously worked for a startup has also made the ‘fit’ factor so crucial to early startups an easier hurdle to get over, as people on both sides (founders and first employees) know more what they’re looking for from each other. In this way, even if many companies of the 2009 class of Techstars aren’t active (currently only three are active, with two acquisitions) there can be no denying the impact their work had on the success of the 2013 class.

Hopefully the class of 2014 is even more impressive than the 2013 class and that each class continues to open new doors of opportunities for future classes.