Techstars Sustainability Adds to Growth of Sponsored Accelerators

After Techstars opened its first program in Boulder, CO, in 2007, the startup accelerator program expanded into three cities over the next four years. But then the real growth started happening. In 2011, Techstars began launching accelerators that focused on startups innovating in a specific sector in partnership with big companies. It partnered with Nike in Portland, OR, on apparel-related technology in 2012 and with Barclays on fintech in 2014.

As of yesterday, those corporate-sponsored accelerators outnumber the city accelerators by a measure of 22 to 12, according to Amy Smith, Techstars vice president of partnerships.

This morning, Techstars added another corporate-sponsored program to the mix: an accelerator for startups with technology focused on sustainability. The Sustainability Accelerator, based in Denver, is the first time Techstars has partnered with a nonprofit, The Nature Conservancy. Smith says that won’t change anything about the way the corporate program operates.

Techstars didn’t go into great detail about what types of startups might qualify, though it said it wants startups that can help provide food and water sustainably, and can tackle climate change. Techstars said the Conservancy has previously worked with startups focused on efforts such as improving soil health and fishing practices.

“There’s no shortage of opportunity across that category for investment and innovation,” Smith said. Techstars launched another “social impact” accelerator in Austin just two weeks ago called Techstars Impact, which is sponsored by a division of Morgan Stanley and focuses on startups that solve environmental and social problems.

Techstars has programs focused on plenty of other industries and verticals, such as healthcare and Internet of Things. It recently partnered with the U.S. Air Force on a Boston-based program that is looking for technologies that have applications in the defense and the private sector.

Of course, Techstars continues to operate city accelerator programs, and to open new ones. It launched accelerators in Kansas City, MO, Toronto, and Los Angeles this year. The company began adding corporate-sponsored programs in part as an experiment, and continued doing so because both startups and sponsors had something to gain from it, Smith says.

“(Sponsors) have vast amounts of experience, resources, and connections in areas where startup founders can leverage,” Smith says. The corporate sponsors get to see the “future of technology” being developed by these innovative entrepreneurs, while also getting insights on trends and access to young talent, she says.

Some sponsors also invest alongside Techstars in the startups. Techstars takes a 6 percent equity stake in each company that participates in exchange for $20,000 and various other benefits such as mentorship, a demo day, and office space. Techstars also offers each company a $100,000 convertible note they can take or not.

The corporate sponsor’s financial contributions help pay for the Techstars vertical-focused operations. Techstars has other “global” sponsors that help pay for its city-focused operations, Smith says. Techstars also makes money when it can cash out equity it owns in the startups it accelerates.

The Sustainability Accelerator is beginning to accept applications in January for its first group. Techstars plans to run three classes with 10 startups in each. Other investors and corporate sponsors, including The Rockefeller Foundation, are also providing funding for the program.

The first corporate accelerator opened in Seattle in 2011, in partnership with Microsoft. The growth of the corporate accelerators is a sign of Techstars’ evolving business, Smith says.

“Like any other good startup, we also experiment and continue to innovate around how we are implementing our mission and driving more access and value to entrepreneurs,” she says.

David Holley is Xconomy's national correspondent based in Austin, TX. You can reach him at dholley@xconomy.com Follow @xconholley

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