Another afternoon presenter at yesterday’s Startup Empire was David Cohen, founder and Executive Director of TechStars, which provides a unique opportunity for early-stage startups. Here are my notes from his presentation:

Boulder, Colorado

• Why did I come here today? Because I’m hearing more about Toronto every day
• I started out in development
  • Did three startups
  • Then went to the dark side: angel investing
  • Started all kinds of companies in all different ways
• I’m based in Boulder, Colorado
• Two of my companies are ZOLL Data Systems, Earfeeder
• One of my startups failed, but there’s no evidence on the net that it ever existed
• What’s Boulder known for?
• Mork and Mindy
• “4:20”
• Nearby skiing
• University of Colorado
• It’s northwest of Denver and has a population of 125,000 – with students! Denver has about 1 million people

VC in Boulder vs. VC in Toronto

• VC in boulder
• $311 million in Q1 2008 in Boulder County
• Taking into account its population of 125,000, that makes for about $2,500 in venture capital for each person in Boulder
• VC in Toronto
• $130 million in Q1 2008
• Taking into account its population of 5.5 million, that makes for about $23 in venture capital for each person in the Toronto area
• Toronto has a chicken-and-egg problem
• We learned in Boulder, VC follows innovation
• A UFO didn’t land in Boulder and drop off VCs
• There was a strong telecom industry that grew up there (Colorado is the home of telecom and storage)
• People who got rich off those industries stayed in Boulder and asked "What can I do with this money?"
• 2nd- and 3rd-time entrepreneurs decided to become angels
• Most angels are driven by more than just the money
• Companies in Boulder: Lijit and Newsgator to name a few
• The VC followed

The TechStars Concept

• Along with me, other people mentoring at TechStars are:
• Brad Feld: Invested in Harmonix, who are behind the Rock Band games
• Jared Polis: He was behind Blue Mountain Arts online cars and ProFlowers — he got elected to congress on Nov 4th
• TechStars is a mentorship-driven seed stage investment fund
• It’s been referred to as "Incubator 2.0, boot camp for entrepreneurs", but to me it’s mentorship-driven
• The big benefit for companies in the Techstars program is not small amount of money we provide, but the people we surround you with
• At Techstars, you share ideas early, get the feedback
• 10 teams of typically young entrepreneurs come to Boulder for the summer
• If you get in, you get this incredible mentorship experience
• Mentors spend time with the 10 companies
• Atmosphere of camaraderie between the companies
• Companies get integrated into the tech scene
• Our “New Tech Meetups” are the 2nd largest in US, after NYC
• We make our companies uncomfortable – we make them pitch often
• First month: we ask them not to work on their product so much; it’s laregly about learning
• At the end of program, they get just enough funding to get them to the next point
• Techstar’s progress so far:
  • 2 summers = 20 companies
  • Only 1 of the 20 companies is now defunct
  • 2 of the 20 companies experienced positive exits (SocialThing, IntenseDebate)
  • 13 of them have acquired angel or VC funding
  • All told, we’ve invested under $600K in 2 years — positive ROI
• Benefits
• 40 jobs in Colorado created (probably 40 more elsewhere)
• AOL set up an office in Boulder after SocialThing acquisition
• 9 of the 20 companies have stayed in Boulder

Lessons

• Try not to focus to much on VC. Focus on product and customers
• Your community can be more powerful than you imagine if it works together
• Promote your community when you promote your company
• Mentorship is the scarce resource that matters