TechStars - SeedFunding+Mentoring+Boulder for your dream startup

By Vivek | January 16th, 2007 at 11:27 am ET         

Brad Feld, investor in for some of my favorite companies including Newsgator and Me.dium, is always up with interesting investment ideas. His newest venture is TechStars that will provide angel funding and mentoring to young entrepreneurs in Boulder, CO. The idea, which was put forward by David Cohen and David Brown, co-founders of Zoll Data Systems, will get together 40 proven entrepreneurs from the area to mentor and guide teams participating in the program.

When the program starts in Summer of 2007, participating teams will receive $5,000 per founder for up to 3 founders in return for a 5% equity stake in their ventures. This round of funding will come with no strings attached and TechStars will not look to get voting rights or board seat. This seed funding should be good enough to get the teams through the summer and develop prototypes. During this time TechStars will take care office space, internet access, legal services, and hosting. Near the end of the program, further funding might come from other institutional investors or from TechStars.

TechStars has lot of similarities to Paul Graham’s YCombinator that has nurtured some very smart startups including Reddit and WuFoo. Another VC firm, Charles River Ventures(CRV), had also launched a similar investment program called QuickStart in November 2006 that gives up to $250,000 to startups in form of seed funding. CRV provides this funding in form a load but does not seek a personal guarantee and hold you personally responsible for repaying the loan. Important twist to CRV’s plan is that the loan converts into equity only if and when the startup closes its next round of funding (typically a Series A round).

With inexpensive open-source server side software options and free hosting available, it is very difficult to tell how much funding a company really needs to build a prototype. Right mentoring, relatively risk less funding for investors, and a super-charged summer of development period are the right mix to know whether teams can get the ball rolling or not and how much funding they really need. For those who love Boulder and Brad’s field and style of investing, TechStars should prove to be good ground to grow up.

FYI: The application deadline for Summer 2007 is March 31, 2007

Links:
TechStars