Techstars Seattle is done. What does it mean for the city’s startup ecosystem?
That’s a question on our minds in the immediate aftermath of the surprising news this week from Techstars to shut down its Seattle program.
“It’s a serious loss for our remarkable community,” Isaac Kato, former Techstars Seattle managing director, told GeekWire.
More than 160 startups participated in the core Techstars Seattle accelerator since it launched in 2010. The program, based at the University of Washington’s Startup Hall, served as a key hub for budding startup founders who needed mentorship and capital as they built the next great companies. It also drew entrepreneurs and investors to Seattle, bolstering the city’s tech muscle.
“I moved from India to San Jose and decided to move to Seattle only because of Techstars Seattle,” said Surbhi Rathore, co-founder of Symbl.ai, a Techstars Seattle 2019 grad. “We moved our HQ here and never went back.”
Techstars provided an “on-ramp to entrepreneurship,” said Bilal Aijazi, founder of Polly.ai, a Techstars Seattle 2016 grad that went on to raise multiple rounds of funding.
But the demise of one program “doesn’t make or break Seattle,” noted Elizabeth Scallon, a longtime Seattle startup leader who ran accelerator programs at the UW and WeWork.
“Seattle has some of the best founders,” she said. “Just because Techstars is closing doesn’t mean the community is walking away from that.”
There’s buzz within Seattle startup circles that something else will fill the void.
“I think it opens up an opportunity,” said Aviel Ginzburg, general partner at Founders’ Co-op who previously ran Techstars’ Amazon Alexa accelerator in Seattle. “Change can be sad and painful, but in an environment of growth, which we absolutely have in the Seattle startup ecosystem, Techstars shutting down will no doubt make room for something better for everyone.”
In the meantime, though, the lack of a top-tier accelerator program could be a detriment to the Seattle startup community.
“We need a YC for Seattle,” said Rathore, referring to esteemed Bay Area accelerator Y Combinator. “If Techstars is not that, I am afraid more entrepreneurs will move to the Valley and that is not in favor for the innovation beyond Big Tech that we want to foster in the Pacific Northwest community.”
Techstars said it plans to focus on cities with higher concentration of venture capital activity.
Seattle-area companies raised $751 million in venture capital last year, according to PitchBook — which pales in comparison to Silicon Valley ($30.3 billion) and lower than New York ($11.4 billion); Boston ($5.8 billion); and Los Angeles ($4.8 billion).
But “VC interest and activity in Seattle remains very strong,” said Tim Porter, managing director at Madrona, the region’s largest and oldest venture capital firm.
However, Scallon pointed to a dearth of funding availability in Seattle for entrepreneurs who need capital to test their ideas at the earliest stage.
The traditional accelerator format may not be what’s needed to help address that need, she said.
“The accelerator curriculum and the pressure cooking of an eight, 12-week program — I don’t know if that’s really necessary anymore,” she said.
Madrona runs its own version of an accelerator, Madrona Venture Labs, and Pioneer Square Labs operates a robust startup studio in Seattle.
But something more agnostic or decentralized with shared values across a diverse set of investors — perhaps akin to the early days of Techstars Seattle — may be what Seattle’s startup scene needs.
“If there is good news here, this resilient and tightly-knit community will almost certainly self-organize to preserve the relationships that have been formed over the past decade and a half,” Kato wrote on LinkedIn. “There is ample opportunity for a successor to fill the gap — strong local accelerators such as Techstars Seattle have proven to be immensely helpful to the entrepreneurial communities they serve.”
