Social media channels were sparked by criticism from past participants in its decisions, who claimed that the well-known startup accelerator had forgotten what has traditionally made it so successful: city-based operations in places where there aren't many other programs like it. A former managing director (MD) of Techstars also told TechCrunch that it was a mistake to switch the focus of city-based accelerator programs from local financing to online fundraising.

The company opted to halt its Austin-based program, which TechCrunch covered in late 2023. As a result, the accelerators in Boulder and Seattle will soon close.

Founders and regional venture ecosystems worldwide will be impacted by changes to Techstars' operations, given its wide global reach and long history of funding early-stage firms.

The local link

Following Techstars' decision to withdraw from specific markets, Chris DeVore, the former managing director of Techstars Seattle, wrote a lengthy letter denouncing the organization's strategic decisions, which included centralizing its fundraising efforts and creating programs with corporate sponsors serving as financial anchors.


Maëlle Gavet, the CEO of the organization, joined the conversation and openly exchanged ideas with him.

However, some others indirectly repeated some of DeVore's remarks to TechCrunch. According to a former managing director (MD), Techstars' local limited partner investors gave more residents of those cities a stake in the company's local initiatives. As funding for TechStars eventually came from a single pot, locals had less motivation to see to it that local startups prospered.

In his piece, DeVore advanced a similar case and said that TechStars' ability to draw in talent was negatively impacted by the decision to centralize fundraising away from smaller communities.

He stated that the outcome was a "eviscerat[ion of] the incentive system that had attracted high quality Managing Directors to run programs, and had bound together investors and mentors in each local market" after it became "clear that many of the new programs and MDs were struggling to raise their own, local funds."

Gavet stated that the local funding model had reached its end because it was no longer functional in an interview with TechCrunch regarding the changes that were revealed this week. She claims that Techstars' trial, which "confirmed that it's not working as well as it used to," involved trying the strategy "again in three markets to have local fundraising to see if it was going to take off again" during the previous six months.

The former MD also told TechCrunch that client turnover rates were high, criticizing Techstars' collaboration with corporate sponsors to fund initiatives.

According to the MD, Techstars' focus shifted away from local funding and toward corporate funds, making city-based supporters and founders less important. In a similar vein, DeVore observed that Techstars had shifted from a structure centered on making money from paying corporate clients to one that was driven by "passionate commitment to founders and the entrepreneurial journey."

In an interview with TechCrunch, Gavet refuted these views once more, stating that the corporate programs have "been a critical competitive advantage" for the company and will remain so.

The times ahead

The status of Techstars' own funding is one unanswered matter. The business closed a $150 million fund in 2021 after raising a sizable round in 2019. On the other hand, an SEC filing from 2023 for a second $150 million car has not been updated since it was made. Has the new fund made any progress? Giving didn't say anything, but she seemed to be okay. She expressed her hope to be able to "set the record really straight" but informed TechCrunch that she was unable to "comment about fundraising."

TechCrunch received information on the 2024 fund from a person with knowledge of the situation. We were unable to find out how much money was raised or whether the fund is on schedule to meet its $150 million goal.

Corporate transformation is never a simple process, but in due course, it will be simple to evaluate Techstars' makeover and new course. Does the accelerator group support rapidly expanding businesses that eventually go public or sell for significant profits? If yes, how often is that compared to earlier?

To be fair, Y Combinator, which is its biggest rival, has also redesigned its business in recent quarters, stepping back from late-stage investing, cutting the size of its cohort, and returning to an in-person format. Nevertheless, Techstars is up against competition from other accelerator programs both domestically at Y Combinator and internationally.

At least Gavet seemed certain that Techstars' brightest days are still ahead of it.

We made roughly 700 pre-seed investments the previous year. We should be increasing our investments both domestically and internationally by approximately 800 this year. "The pipeline appears robust," she remarked.