Techstars NY Is Losing "Its Ability to Command Respect and Dollars"

TechStars New York has hired a new managing director, almost five months to the day after the accelerator fired its previous managing director, Eugene Chung.

The new managing director is Alex Iskold, who recently stepped down as the CEO of GetGlue, one of those seemingly doomed "second screen" startups that try to get consumers to talk about TV and sports in an app, rather than on Twitter or Facebook. After an earlier deal fell through, GetGlue was acquired by a Provo, Utah-based startup called i.TV last week.

Iskold is the fourth managing director for TechStars New York in three years, including Nicole Glaros, who was only meant to serve an interim role, but took over after Chung's unceremonious ouster just two weeks before Demo Day.

In a blog post announcing his new position, Iskold, who seems to have a more robust tech resume than the other previous managing directors, mentioned his role mentoring "weeSpring – a community for baby products, and also Jukely – a social music app for concerts," during TechStars' last class.

According to Crunchbase, the only financing weeSpring and Jukely have raised is their initial TechStars investment ("$18,000 in seed funding, and an additional option $100,000 in convertible debt note") in return for equity. That seems less a reflection of Iskold's mentoring skills than another sign of the accelerator bubble bursting.

"The last batch of TS companies are getting next to no deal flow," a source familiar with the program told Valleywag. "Word on the street is that someone from AngelPad in LA to set up early Q1 to take over as top accelerator in NY." That's likely where "most of the accelerator dollars are gonna go." (This June AngelPad, a startup incubator, announced plans for a New York City office.)

Gone are the days of announcing oversubscribed rounds on stage. Back in December, a New York investor told me that some TechStars graduates "get the money and don’t understand that it’s money to build a business–or at least get LAUNCH," complaining that they hadn't been properly vetted.

The source who mentioned AngelPad said outfits like Y Combinator "have a track record and tight control to help entrepreneurs through those growing pains":

"The problem with accelerators in general though is most startups are young and naive about the business works. They get money and will feel grateful, even if, in reality they’re getting screwed long term if the accelerator loses its ability to command respect and dollars in the community… which is exactly what happened to Techstars in NY.”

Even Y Combinator is not immune to constriction in the market. "We grew too fast," Paul Graham wrote last year, before sharply downgrading the number of companies in each class and the amount Y Combinator would invest.

According to Crunchbase, of the 11 startups from Techstars New York's last class, AdYapper raised $1.2 million, Plated raised $1.4 million (in the middle of the program), TriggerMail received $1.1 million, but none of the other eight startups raised money after joining TechStars. [UPDATE: Although the news is not yet public, weeSpring has raised an undisclosed amount from Empire Angels, Paul Francis, the former CFO of Priceline, and others. Jukely's CEO also claims he has raised funding, but is "not talking about that publicly."]

Perhaps new funding rounds are in the process of being finalized. In response to questions from Valleywag, Techstars cofounder David Cohen said:

"we think 7 or 8 of the companies in the previous class will raise money. some have and have not yet announced and others will announce soon."

In VentureBeat's Demo Day write-up from June, a number of companies mentioned already having half the money "committed." Maybe they meant soft-circled?

UPDATE: Yesterday evening Nicole Glaros sent out announcing Iskold's appointment and acknowledging some of the difficulties Techstars has faced.

Even at Techstars, we have really struggled, especially this last year, to really capture the potential of the community. We did a lot of things wrong and we learned a lot.

Here is the full email:

From: Nicole Glaros <nicole@techstars.com>
Subject: Great News for Techstars in NYC: Alex Iskold joins as Managing Director and Other Big Changes
Date: November 10, 2013 at 11:30:54 PM EST
To: David Cohen , Alex Iskold , KJ Singh

Hello Techstars friends & family (confidential until Monday morning, 9am ET!)

This last class of Techstars was my sixth program but my first ever in NYC. This month marks the year anniversary of working with the NYC program and I've had a lot of time to learn the ins and outs of the Silicon Alley tech scene and the Techstars' ecosystem there. Because I've run programs in other locations, I've had the unique opportunity to learn about the characteristics of different tech communities and see the best practices in each. I can say without a doubt that because of the unique assets of NYC (including access to industry and Fortune 500 companies), access to capital and a quickly growing stable of amazing, experienced entrepreneurs – NYC has the potential someday to be the single best tech market out there.

That said, my feeling is that we still have a ways to go before fully realizing the potential in NYC. There's still a lot of gelling that needs to happen and having worked with mentors, entrepreneurs, and investors in NYC, I've seen that friction firsthand. Even at Techstars, we have really struggled, especially this last year, to really capture the potential of the community. We did a lot of things wrong and we learned a lot. Now, with a year under my belt, I have a deep understanding of where our areas for improvement live, have had countless discussions with influencers in the community and I've developed a theory on how to make the tech scene in NYC amazing. I have a heartfelt and deep belief that by putting the entrepreneur first, Techstars can gravitationally change the NYC tech scene for the better. So, in the spirit of an overhaul, I'm going to change some things at Techstars that I hope has broader implications across the entire ecosystem.

1. I'm pleased to announce that we've hired veteran entrepreneur Alex Iskold to join Techstars in NYC as Managing Director. We have learned that you need experienced entrepreneurs in leadership roles and Alex is an experienced entrepreneur who has been deeply involved as a mentor to our programs. His background as a great CEO gives him a unique skill set well suited for the job. He believes, as do I, that this is an amazing city with a ton of unrealized potential, and he and I are hell bent on making this the best city for entrepreneurship. I'll still be heavily involved in the program from a coaching and mentorship capacity and will be there for the duration of the program, but I'm thrilled to hand the day-to-day operations off to Alex. Here is Alex's blog post about joining Techstars.

2. Mentorship is at the core of what makes Techstars magical and in NYC we have access to some of the world's best mentors. As I've traveled to different communities, I've learned that the magic in helping entrepreneurs is deep engagement from mentors. But in New York, we opted to focus on breadth of exposure as opposed to depth of engagement because of the sheer quantity of high-quality individuals. The result was entrepreneurs in too many meetings with mentors that didn't know enough intimate details about the companies to make insightful recommendations. There is no quick fix and a single thirty minute meeting with a team does not help entrepreneurs become successful. In short, without that depth of engagement, the signal-to-noise ratio was off. We're working on ways to leverage our mentors' areas of expertise into focused, results-oriented group meetings with bi-directional feedback (both to the mentors and to the companies). Our hope is that by focusing on outcomes and feedback, not only will our teams improve but mentors will get better too. Everyone wins. Our dream is that this will even trickle outside of Techstars, helping create a tectonic shift in the way the entire community interacts with and helps entrepreneurs and startups.

3. Community is critically important to entrepreneurs and I'm excited about some programs and events we're working on that will bring the tech community together. In fact, we're doing a couple of these events in the next month or two. Check them out. They are free and open to everyone, not just Techstars' teams or applicants.

4. This one really isn't a change, it's just a mantra. When the community comes together and "Gives First," magic happens. I see it a ton in NYC, but we've never really labeled it as such and it's one of the most powerful tools any community has. When mentors genuinely "Give First" to entrepreneurs, investing their time, guidance, address book, and even capital – we can better help ALL entrepreneurs in NYC. A rising tide raises all ships. Don't be surprised if you hear "Give First" around the Techstars community.

If you didn't already know it, applications for Techstars NYC are now open and they close by the end of the year. Applying early will get your application the attention it deserves (see my post about this from earlier this year).

My quick asks are 1) please refer any great team to Alex & myself, we're on the hunt for teams for the next program! 2) Help us make some noise that applications are open. Click here to tweet this: Entrepreneurs, applications for @Techstars #NYC are now open. Apply today! http://apply.techstars.com 3) Give a warm welcome to Alex Iskold!

We love this city and we have seen what Techstars can do in a community. We're thrilled by the possibilities here and know 2014 is going to be an amazing year. Let's do this together.

Nicole Glaros
Managing Director
Techstars
@nglaros

[Image via Techstars]