Lessons from TechStars’ David Cohen on Building a Startup Culture: 7 Takeaways from the Xconomy San Diego Dinner

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TechStars’ lean and rapid development approach. The four co-founders didn’t need to raise a big fund to provide 10 startups with $18,000 apiece. They each invested personally and as general partners, they directly controlled their investments—and for two companies to exit within a year is incredibly fast.

“Instead of thinking big, we should be thinking small,” Jeb Spencer of San Diego’s TVC Capital said afterward.

As for Cohen’s criteria, everyone around the table seemed to agree that San Diego, with its balmy climate and coastal lifestyle, has long been an ideal locale for the creative class.

They also see the new EvoNexus incubator in downtown San Diego as the emerging “rally point” for Internet entrepreneurs—along with the Ansir Innovation Center in San Diego’s Kearny Mesa neighborhood. These incubators also serve as entry points for new entrepreneurs—along with San Diego Tech Founders, a Web-based group with almost 800 members that organizes “meetups” for local tech entrepreneurs.

The entrepreneur community here also is entrepreneur-led—it’s just not connected to the legacy non-profit organizations that embody San Diego’s innovation establishment, said Brant Cooper, an Internet startup consultant and lead organizer of the San Diego Tech Founders. In this regard, many agreed that the groups created to support innovation and entrepreneurship in San Diego have collectively stifled local Internet entrepreneurs.

“These non-profits are kind of fighting it out for funding,” said MindTouch CEO Aaron Fulkerson, who was outspoken in his criticism. The pressures of raising money have led them to focus more on the sponsors than on the needs of entrepreneurs, which is reflected in their programs and events. “It’s not authentic at all,” Fulkerson said. “It’s not about ‘what can we do for the entrepreneur community.’ It’s about ‘what can we sell you.'”

The single biggest challenge, however, is a crying need for high-quality mentoring.

“I think San Diego lacks a lot of the mentors who either lack the philosophy to ‘pay it forward’ the way people in [Silicon] Valley do, or the relevant experience for today’s kind of startups,” said Brian Mesic, a partner in the Los Angeles office of Anthem Venture Partners. “They either made their money in old school technology, or they’re transplants and don’t feel the same sense of community.”

San Diego lacks the kind of young angel investors who are helping new startups throughout Silicon Valley, said Peter Solvik, a managing director in the Menlo Park, CA, office of Sigma Partners. Nevertheless, Solvik said, “If you systematically tried to find everybody in this town who started a [software] company—it could be consumer, mobile, Web, or older—there’s just a ton of them.”

The way to get good mentors is to focus on interesting, high-quality startups, and it’s important to take a long view, Cohen said. Creating an entrepreneurial community “is not going to happen this year or next,” he added. “It’s going to happen over a long period of time.”

Inside the new downtown EvoNexus incubator

In attendance at the dinner—which was sponsored by the San Diego Regional Economic Development Corp., the Cooley law firm, and Silicon Valley Bank—were Matt Emery of JMI Equity, Peter Solvik of Sigma Partners, Brian Mesic of Anthem Venture Partners, Jeb Spencer of TVC Capital, Kevin Hell of EvoNexus, Malcolm Bohm of LiquidGrids, Brant Cooper of San Diego Tech Founders and market-by-numbers.com, Parand Daruger of Xpenser, Aaron Fulkerson of MindTouch, Kim Davis King, Francis Costello of StockTwits, Tom Lookabaugh of Entropic Communications, Chester Ng of SweetLabs, Phelen Reissen of SDtechscene.org and digithrive.com, Ping Wang of the Ansir Innovation Center, Dan Weeks of Brightscope, Eric Otterson and Ken Rollins of the Cooley law firm, Meredith Dowling of the San Diego Regional Economic Development Corp., and Andy Pelletier and Buzz Kreppel of Silicon Valley Bank. Xconomy Associate Publisher Jim Edwards and Xconomy San Diego Editor Bruce V. Bigelow also were there.

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Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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