TechStars in Seattle Will Be “Centralizing Force” for Entrepreneurs and Startups, Investors Say

Not to hype this too much, but TechStars coming to town could be the rallying point for a new generation of high-tech entrepreneurship in Seattle—the likes of which we haven’t seen before. At least, that’s the word from two of the main investors responsible for bringing the tech startup program here. (By now, most of our readers know about Boulder, CO-based TechStars, but in case you missed it, here are some stories from earlier about the seed-stage investment fund’s expansion to Boston and Seattle.)

This is the latest intriguing concept we’ve seen from VCs who are going back to basics by focusing on early-stage companies and creating a central nurturing environment (including office space) where entrepreneurs can network among themselves and, most importantly, get mentorship from more experienced people. Polaris Venture Partners, for one, has done this with Dog Patch Labs in San Francisco, Boston, and now New York. Seattle-based Accelerator is one local example where a similar concept has worked for early-stage biotech companies.

Andy Sack, executive director of the new Seattle program, gave me some historical perspective on the tech scene. When he moved to Seattle from Boston in 2000, he says, “there was next to no entrepreneurial infrastructure.” There were investors and startups, sure, but there was no main café to meet at, no hangouts, none of that. In Sack’s view, things have changed a lot in the past three years, for the better. But, despite a lot of grassroots efforts to support tech entrepreneurs, “nothing has really pulled the community together,” he says. Providing that kind of supportive environment, where entrepreneurs can make connections and really think, is one of the key ideas driving TechStars. (Sack, a serial tech entrepreneur and investor, didn’t say yet where TechStars will be located physically.)

“Seattle needs that because it needs to come together to support fledgling seed-stage companies,” he says. It sounds a lot like the motivation Sack had when he and Chris DeVore started Founder’s Co-op, a seed-stage fund and mentorship program, in 2008. Yet TechStars promises to be more than that.

“There hasn’t been something like this in Seattle, or even in the Valley, where literally the entire investment community has come behind something and made it work for startups,” says Greg Gottesman, a managing director at Madrona Venture Group.

What I hadn’t fully appreciated is that virtually every tech investment firm in town has signed on to a three-year commitment to put a small, separate fund into TechStars. That includes everyone from Madrona to Ignition Partners, Voyager Capital, OVP Venture Partners, Maveron, Buerk Dale Victor, Draper Fisher Jurvetson, Second Avenue Partners, Trilogy Partners, and WRF Capital, to prominent angel investors such as Linden Rhoads from UW Tech Transfer. Plus heavy hitters Jeff Bezos and Paul Allen are also behind it. (No word yet on whether Bill Gates is in.)

It’s not a lot of money—the fall 2010 session will host about 10 companies (mostly Web focused) with $18,000 max each—but it shows a real commitment to making the program work. “You put it on your books and you’re committed to it,” Gottesman says. “It’s not, ‘Maybe I’ll show up.’ They’re putting money and time into it.” He adds, “Everyone thinks the timing is right. It’s a shot in the arm for really early-stage startups. “

TechStars doesn’t like to be labeled as an “incubator”—probably because so many of those operations have failed—but its essential function is to nurture very early-stage companies along until they can raise enough money to stand on their own feet. If all goes well, local venture firms will be competing for access to the best startups that emerge from the program. To this end, it sounds like a lot of investors around town had to put their egos aside for the greater good, to make the program happen.

“We didn’t want it to be a Madrona thing. We didn’t want it to be a Founder’s Co-op thing. We wanted it to be a community thing,” Gottesman says. He adds that they want to work closely with organizations like the University of Washington, Alliance of Angels, and Washington Technology Industry Association.

It couldn’t happen any other way in Seattle, which (for better or worse) has an extremely tight-knit startup community. “In Boulder and Boston, it was individuals bringing the program to the city, more grassroots oriented,” Sack says. Seattle was different because it was vital to get support from the big players in town from the beginning. “In this case, institutionally—with the UW behind us [for instance]—we were much more strategic,” he says.

I asked him some more about the unique challenges of Seattle as TechStars moves forward here. In particular, I wondered whether some groups would feel threatened by the program, and how to overcome that. Sack admitted that some people and programs “were a little nervous before.” But he says, “In general, it was a void that needed to be filled. Nobody in Seattle was doing it.” (While there are angel investment groups that provide capital to tech startups, and plenty of networking functions, nobody has put it all together in one place, with connections to all the major VCs.) He says he’s focused now on getting the word out to the entrepreneurial community. “It’s all well and good to have investors,” he says, but “getting good applicants” will ultimately make or break the program.

Indeed, one of the most valuable things about TechStars (in my mind) is that it will draw new talent and more outside perspectives to Seattle. “I would expect 40 to 50 percent of the deals to come from outside the Northwest,” Sack says. That means people will be “applying from all over” the country and even overseas, he adds.

Culturally, he says, “fragmentation will still exist. But the nature of the program—as part startup boot camp, and part community coming together—will act as a centralizing force.”

Whether this is the sort of effort that could lead to the next Amazon or Microsoft remains to be seen, obviously. “The next Amazon is a pretty lofty goal,” Gottesman says. “There’s going to be 10 startups, and it’s important to bring entrepreneurs from everywhere. We want a wide base of folks to look at.” He adds that with new entrepreneurs, maybe their first go-around won’t be a huge success, but the next one, or the one after that, will be. “The key is to give them the resources and help, and create opportunities for entrepreneurship.”

“TechStars is really good at parties,” Sack says. “We’ll throw some parties.”

Gregory T. Huang is Xconomy's Editor in chief. E-mail him at gthuang [at] xconomy.com. Follow @gthuang

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4 responses to “TechStars in Seattle Will Be “Centralizing Force” for Entrepreneurs and Startups, Investors Say”

  1. Zishan says:

    > “there was next to no entrepreneurial
    > infrastructure.” There were investors and startups,
    > sure, but there was no main café to meet at, no
    > hangouts, none of that

    Definitely great news for the Seattle community! I very much empathize with the sentiment, and I am not alone.

    Next stop, Chicago!