Beyond the $6K per founder TechStars invests in startups selected for its 12-week program, the accelerator will offer an additional $100K in funding to all accepted startups beginning in 2012 thanks to a just-raised $24M fund. The money is intended to make TechStars more attractive to entrepreneurs and remove some of the fundraising pressure.
Investors in the new fund include Foundry Group, IA Ventures, Avalon Ventures, DFJ Mercury, SoftBank Capital, SVB Financial Group, RRE Ventures, Right Side Capital Management and TechStars alumni. TechStars' existing funding comes from over 75 venture funds and angel investors.
The $100K is in the form of a convertible note, the same type of deal Y Combinator began offering its accepted startups in January though the YC amount is $150K [ see our analysis of the YC deal ].
The fund should last through at least 2015 as TechStars funds about 50 companies per year across its five programs -- or $5M per year -- and has no intentions to increase the number of companies or programs, TechStars co-founder David Cohen tells LAUNCH.
The fundraising process began two months ago "and came together very quickly," according to Cohen.
He did not say if the YC deal was a factor in raising the fund but did confirm the funding was not a direct response to founder demand: "Our observation was that many of the companies were spending time raising money early in the program and we felt it would be powerful to provide them with additional financing," he says.
About 70% of TechStars companies raise money after TechStars ends. Going back to the first class, held in Boulder in summer 2007, the average amount raised "exceeds $1M" according to Cohen.
Founded in 2006 by Cohen, Brad Feld, Jared Polis and David Brown, TechStars launched in Boulder in 2007 and has since added programs in Boston (2009), Seattle (2010) and New York (2011). TechStars Cloud, only for startups involved in cloud infrastructure, will kick off its inaugural class in San Antonio, Texas, in January.
The last program in 2011 is the fall class in Seattle. Applications for all 2012 TechStars programs are open.