From our newsletter sent on 9/4/2014.
Note: updated to better reflect how the Techstars equity back guarantee program works.
Techstars now offers startups going through their program an equity back guarantee. Essentially, companies still give up equity but can negotiate it down afterwards if they were dissatisfied with their Techstars experience (as reported by Dan Primack). Is this the beginning of freemium AaaS (Accelerator-as-a-Service)?
We chatted with a few folks in the investment ecosystem about this in the AM. Here’s some common questions or comments:
- This is proof of the accelerator power law. In other words, there is Y Combinator and everyone else.
- This seems desperate. Or perhaps TS is just making more money from the franchise model (running accelerators for corporations)?
- Is this just a sign that there is too much money chasing too few opportunities?
- Is this going to force lesser accelerators to follow suit?
- This is entrepreneur-friendly being taken to foolish extremes.
Personally, we’re looking forward to when a VC invests money but only takes equity for their “value add”. That will be official bubble territory.
What do you think about Techstars’ move? Smart, desperate or something else?