Techstars Seattle Startups Do Demo Day Twice
In the midst of its annual celebration of all-things startup, Seattle tech investors and supporters heard from 11 well-polished new companies—some already gaining significant momentum—graduating from the Techstars program on Tuesday.
The startups in the 2015 Techstars Seattle class are tackling everything from candy to cloud security. Managing director Chris DeVore calls it one of the strongest classes to emerge from the startup accelerator in its six years operating here.
Several of the founding teams were on their second or third startup. Many had been part of successful exits. This class is long on experience—and endurance—and their businesses, on the whole, came off at a public Demo Day event as well-developed.
The startups actually presented twice on Tuesday: once in the morning to an invited group of accredited investors, in a more interactive format, and again in the evening to the broader community of friends, family, and supporters, at the Museum of History and Industry. In the past, the Demo Day audience included everyone, and companies disclosed details of their fundraising efforts. Last year, there was no specific fundraising talk from the presenting companies, a reflection of heightened sensitivities about accidentally soliciting investment from unaccredited investors.
“A lot of that is driven by the JOBS Act,” DeVore said. “We’re trying to make sure that we’re being compliant with regulatory requirements about public solicitation.”
DeVore said the model, while requiring more work, accomplishes the two big goals of getting the graduating companies in front of investors, and saying thank you to the community that supports their development.
Asked for an assessment of investor interest in this year’s class, DeVore said, “Some people will probably be done raising after tonight. Some people will probably have some more work to do. But overall the investor response has been very, very strong.”
The 50 companies to graduate from Techstars Seattle through five previous classes have raised, on average, $2.8 million—or $910,000 if you take the median. Of those 50, 33 remain active, 10 have been acquired, and seven failed, according to Techstars’ stats.
Each company selected for Techstars receives $20,000 to defray living expenses during the program, plus $100,000 in convertible debt, three months of mentoring, office space and business services, and other assistance, in exchange for 6 percent equity.
Another big change coming to Techstars Seattle is the timing of the program. In 2016, the three-month session will begin in February (applications are due Nov. 18) and culminate with a Demo Day in May. This will make perfect sense to any school kid struggling to focus while beautiful weather beckons outside. Foul weather, meanwhile, is perfect for applying noses to digital grindstones. DeVore wrote earlier this fall:
“Winter in Seattle is known for its short days and gray skies, perfect for the kind of focused work effort that Techstars requires. Mentors and investors are similarly engaged in the winter months, making it easier to bring the full power of the community to bear on the teams in program. And with a Demo Day in late May, companies will exit the program with plenty of time to hit the fundraising circuit before the summer holidays kick in and scatter investors to their family travels.”
The schedule until now has put startups on the “fundraising trail at the start of the holiday season, making it tough to line up meetings and drive rounds to a speedy close,” DeVore wrote.
Seattle is one of 21 Techstars accelerator programs across the country and in select overseas markets. The organization has grown into a multifaceted entrepreneurial force with a sizeable seed- and early stage venture fund, a wide array of support programs for aspiring entrepreneurs, a new foundation focused on diversity, and a huge network of alumni and partners.
The Seattle outpost, churning out a crop of new startups each year since 2010, has had an eventful 12 months and ranks among the broader organization’s flagship locations.
DeVore took over from Andy Sack as managing director at the conclusion of last year’s session. The accelerator settled into new digs in Startup Hall and is among the most visible denizens of the “Innovation District” envisioned for the neighborhood west of the University of Washington campus. And Techstars acquired Seattle-based UP Global—the producer of events around the world, such as Seattle Startup Week, going on now—filling out its portfolio of programs to help aspiring entrepreneurs go “from idea to IPO.”
Techstars, its Seattle branch included, has initiated new efforts to track and improve the gender and racial diversity of its company founders and mentors. Its record on that score—by its own admission—is not so great. As DeVore noted in a GeekWire op-ed earlier this month:
“I wish I could say that Techstars Seattle has outperformed the Seattle market on gender diversity, but our track record roughly matches that of the Seattle community as a whole; from 2010 to 2015, Techstars Seattle welcomed 140 founders, of which just 11—or 7.9% of the total—were women. On the mentor front, we’ve done slightly better. Techstars Seattle currently has 146 active program mentors, of which 23—16% of the total—are women.”
Ten of the eleven CEOs presenting their companies Tuesday were men.
DeVore wrote that they don’t have records on the race of Techstars Seattle founders, but will track that going forward.
On a national level, Techstars committed earlier this year to double the number of women in its applicant pool mentor network and track participation of underrepresented minorities and double it over the next four years. Techstars also pledged to publish annual diversity data; provide its staff “unconscious bias” training; and require each selection committee to have a minimum of two women. It also established a foundation to provide grants, scholarships, or sponsorships to groups that have a “meta” impact on diversity, as Techstars co-founder and CEO David Cohen told Xconomy earlier this month.
Class of 2015
All of the 11 companies I saw present Tuesday are doing something interesting, and I learned from each presentation. A few tidbits follow. I expect we’ll be hearing more from several of these companies in the months and years to come.
—It takes an average of 200 days for a company to realize it’s been hacked, said Jack Poon, CEO of AtCipher, which is taking a new approach to cloud security.
—Grant Farwell of Matcherino, which allows fans of e-sports to put up money to entice their favorite online game players to face off in “show matches,” said a typical viewer will spend more than 20 hours a week watching—not playing—online games.
—Some 15 percent of digital gift cards go unused, said Giftbit CEO Leif Baradoy. His company allows unused digital gift cards to be reused by their purchasers, typically corporate buyers who hand them out as rewards for completing surveys, for example.
—Candy Jar, an online candy store, listed Willy Wonka among its advisors. The startup—led by CEO Rob Fletcher, who walked on stage to Def Leppard’s “Pour Some Sugar on Me”—generated more than $250,000 in revenue in a 100-day test launch earlier this year.
That’s 26,000 pounds of candy.