After heavyweights like 500 Startups and Y Combinator, Colorado-based Techstars is the latest international startup accelerator to come to the country. It announced the launch of its India operations last month in partnership with Bangalore-headquartered ANSR, which helps enterprises build startup-focused infrastructure, and is currently putting together a leadership team. In an interview with VCCircle, Techstars founder and co-CEO David Brown talks about plans to double the accelerator's venture capital fund size, investment philosophy, and the potential roll-out of an India-focussed fund. Excerpts:
What are Techstars’ India plans?
First of all, we are going to set up an office and hire a team in Bangalore. That team will bring our products to India. All the programmes will come to the country, but right now the focus is on setting up a leadership team and other resources. We are currently interviewing candidates to find someone who can lead our India operations. The accelerator programme and venture capital activity will come to India soon.
What’s the size of your venture capital fund globally?
We have about $300 million under management so far. It’s the year of fund-raises and you will see that number increase, in fact more than double this year. We are raising a new fund this year, which would at least be $300 million.
Do you plan to roll out a separate India-focussed fund?
Now that we have our operations here, we might create one. It’s very early, though.
The initial infusion will be to support acceleration activity, and then we will decide if we are going to invest from the main fund or create a separate fund for follow-on investments in India.
What would be your selection and investment philosophy for India?
We are early-stage investors, so we will be looking at companies of that stature. We are sector-agnostic, but go for great entrepreneurs and great teams. It’s important that they operate in a marketplace that yields good results, but we we don't narrow it down by category.
We look for tech companies, so Internet or software companies would quality for our programmes. We wouldn’t invest in non-tech companies.
We also do not distinguish between business-to-business (B2B) and business-to-consumer (B2C) companies. Our portfolio has an equal mix of B2B and B2C. It’s interesting how early-stage companies evolve. Sometimes, B2B companies wind up with B2C products and, at other times, it’s the other way around.
We will also look at idea-stage companies, and those with no revenues. Anywhere between the idea stage and a million dollars in revenue would be our sweet spot.
Techstars runs different kinds of accelerators across the globe. What do you plan for India?
Yes, we run different kinds of accelerators. We run corporate accelerators with partners like Target, Barclays and Amazon. We also have horizontal programmes focused on particular regions or cities like Boulder, Seattle, or Berlin. We are likely to come to India with a city-based accelerator such as, say, a Bangalore accelerator where all kinds of companies would be considered. Eventually, we will have both kinds of accelerators here.
Could you share some details on your accelerator programmes?
We typically accept 10 startups, but there are no hard and fast rules there. It’s a three-month programme and then we will have the next batch. We make a financial investment in all our startups, besides the mentorship we provide.
In the US, we provide $120,000 in capital to each startup, taking a 6-9% stake. The numbers might be slightly different here.
The graduating startups then go on to raise more funds. We look at the promising ones for follow-ons and co-invest with other VC and angel networks. Our primary investment focus is firms built by Techstars accelerator companies and alumni. We can invest outside our portfolio companies, but that’s unusual because we are so team-focussed.
When are you likely to launch the first accelerator in India?
We haven’t decided on the timeline for the first batch. We are currently focussed on finding the leadership, and should be able to take off from there. It should be done in months, not years.
What is your mentor network like?
We will build a mentor network in India. We have 30 accelerators around the world and, whenever we add a new one, we build a local mentor network. Besides, the new accelerator gets plugged into our global mentor network of around 3,500 mentors.
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