Founders from the Techstars Seattle 2018 cohort after Demo Day last year. (GeekWire Photo / Taylor Soper)
The Seattle tech ecosystem has changed plenty in the past decade. New startups have grown or died off; the investment scene looks much different; and hometown tech giants continue to expand their footprint.
But one organization has been a mainstay since it launched in 2010, offering a launchpad for early-stage startups to help entrepreneurs turn their ideas into full-blown businesses as part of an evolving tech scene in the Emerald City.
Techstars Seattle today announced its 10th class, marking a milestone for the accelerator that has graduated 100 companies to date. Alumni of the organization — companies such as Remitly, Outreach, Skilljar, Bizible, Leanplum and Zipline — have collectively raised more than $700 million in investment capital. Most have built their startups in the Pacific Northwest, helping expand the entrepreneurial clout in the region.
“Staying alive is the hardest thing to do in startup land,” said Techstars Managing Director Chris DeVore. “We’ve been around for 10 years and have been lucky to be apart of some really great founder journeys.”
Techstars Seattle is part of a larger Techstars network that spans across the globe and also features a Techstars venture capital fund and a new startup studio model. Techstars Seattle is based at Startup Hall at the University of Washington and shares space with the Alexa Accelerator, a separate program co-led by Techstars and Amazon focused around voice technologies.
Here are the ten startups in the newest class (Demo Day is set for May 7 in Seattle), with descriptions from Techstars, which provides $120,000 in funding in exchange for 6 percent common stock as part of the three-month accelerator. Continue reading for a Q&A with DeVore as he reflects on the longevity of Techstars Seattle and dishes on how the Seattle tech scene has changed.AdaptiLab (Seattle) — interactive, customized machine learning training for industry engineers. Automaton (Seattle)— testing automation for complex SaaS tech stacks, made simple. DataChain (Denver)— identity & consumer intelligence for Asia-Pacific, built on Blockchain. Kristalic (Cambridge)— augmenting the human brain with always-on personal assistants. Level — transforming access to credit and savings for the underbanked. Logixboard (Miami)— customer experience platform for the $1 trillion freight forwarding industry. Nodesmith (Seattle) — access to the decentralized future. Rammer.ai (Bay Area)— adding real-time intelligence to online communications. The Tribl Network (Austin)— meeting familiar strangers. Toggl AR (Seattle)— the YouTube of AR content.
Editor’s note: Interview edited for brevity and clarity.
GeekWire: Thanks for chatting with us, Chris. It’s pretty cool Techstars Seattle launched 10 years ago and is still going strong.
Chris DeVore: When we started out, the idea for an accelerator was kind of a new thing. Y Combinator started in 2005 and Techstars in 2007. We were the third version of Techstars — first Boulder, then Boston, then Seattle. Now there are hundreds of accelerators around the world and the speciation around the idea has gotten pretty tense.
As the noise has grown, it’s been about figuring out what you are uniquely good at. Part of what that comes down to — and a lot of this is why we’re so focused on the role we play in the community — is that Seattle is uniquely excellent at a handful of things. It hangs off our anchor tenant companies and the University of Washington. It’s cloud infrastructure; e-commerce marketplaces; enterprise software; and things powered by data and machine learning. There’s also stuff around the edges — space and aerospace, digital health.
That’s sort of the learning over the past 10 years. Just being an accelerator is not good enough. Just being a Techstars accelerator is not good enough. So what can we, in Seattle and the Pacific Northwest, do better than anyone else and how do we make that a promise that if you come to Techstars in one of these vectors, we’re going to give you an unfair advantage — not just regionally but globally. That’s the wheel we’ve been trying to spin.
Techstars Seattle Managing Director Chris Devore. (GeekWire File Photo)
GeekWire: When you say Seattle is uniquely excellent at certain things — what does that mean, and why does that matter? How does it help entrepreneurs?
DeVore: As a founder-centric investor, all you’re really betting on is people. The combination of real domain expertise and enthusiasm for solving problems is the kernel of the founder. Despite the stereotypes, research shows that the highest-performing companies aren’t founded by 20-something kids right out of college. They are founded by people who’ve been in the trenches for a while and learned something about business, about the world, about problems.
The kinds of problems in our ecosystem that gets people up to speed on tends to be about how software changes the world of work for developers or business professionals or somewhere in between. Amazon and Microsoft have helped attract amazingly talented people to the region from around the world who have a passion and expertise for those problems.
If you look at the mentors and investors who make it work, they also came up often through those pathways. They were founders or they spent 20 years working on enterprise software at Microsoft. Their pattern recognition around what good looks like was hardened at some of the institutions that are producing founders. It’s a group of people that understands each other and communicates clearly and has a lot of built-in trust because they share a cultural foundation and passion for those kinds of problems.
The partnership between business and civic leaders and taxpayers is what will set up the next 20 years of growth.
GeekWire: There have been so many accelerators and incubators and similar organizations popping up in recent years. How has Techstars Seattle kept it going for so long? What is the secret sauce?
DeVore: Staying alive is the hardest thing to do in startup land. We’ve been around for 10 years and have been lucky to be apart of some really great founder journeys. We’ve built a community of founders who are themselves really successful, but who are also grateful for the role Techstars played in their success. They give back. They refer companies to us; they come and speak; they mentor. So over ten years, you build this incredible network of people who feel emotionally connected to the brand and community. I keep thinking about the flywheel — the compounding effect of surviving and thriving and playing a role in great people’s success, that keeps coming back to you in positive ways.
GeekWire: You’ve been in a unique spot over the past ten years, launching an early-stage venture capital firm in 2008 (Founders Co-op) and then taking over as Techstars Seattle managing director in 2014. How have you seen the Seattle tech scene change? Is Seattle a better or worse place for a founder now?
DeVore: There are two narratives. The first is business related. We got super lucky that Jeff Bezos decided to build his company here in downtown Seattle and is scaling headcount faster than I’ve ever seen. The magnetic pull of a high performing company for high performing people into the urban core across a broad range of dozens of businesses has been a massive injection of talent and energy to the Seattle urban core.
Then, after what felt like a lost decade in the Ballmer years, Satya has done a similar thing with Microsoft. It felt pretty moribund, the Boeing 2.0 — the Lazy M instead of the Lazy B. Microsoft has become a more exciting and more fun place to work.
Those two things have been incredible. That’s the rising tide that has lifted the boat of the entire region economically from a talent standpoint and and urban standpoint.
The second narrative is around the livability of Seattle. When you look at the Bay Area, they have politically failed to deal with issues around growth and transit and housing. Seattle hasn’t gotten it right every time, but at the margin, when pushed, taxpayers and civic leaders have said ‘we really do need build a light rail system,’ or, ‘we really need to reconsider how we zone for scale and allow more housing to grow.’ So as the Bay Area has choked on its own growth, Seattle has made it possible to continue to grow and not price out absolutely everybody.
Do we have work to do? Of course. Homelessness is a huge issue. But it’s hard to build a great city for work if it’s not a great city also to live in. Seattle leaders have done a good job of saying, ‘we need to do stuff to make this city a great place to live for everyone and not just a great place to make money.’ I think that’s an underreported narrative about why Seattle is winning more and more as an economic center. It’s because we’re doing stuff at the margins to make it a place that works for families and works for transportation. The partnership between business and civic leaders and taxpayers is what will set up the next 20 years of growth.
Sunset over the Seattle skyline. (GeekWire Photo / Kevin Lisota)
GeekWire: With all that talent rushing into the ecosystem, you’d think Seattle would turn into a startup factory. But that hasn’t been the case. Why not?
DeVore: We are still wrestling with what I call a company town mentality. Most people didn’t come here out of school to start a startup. They go to New York City or San Francisco. Seattle is a place where people who already have a career come to further their career. And if you work at Amazon or Microsoft, you’ve had a great run and have a bunch of stock that is worth more every year. Not only is it a great place to get a job, but it’s a great place to keep a job because the companies here are succeeding.
Silicon Valley’s Seattle secret: Bay Area investors making record number of deals in region’s startups
We still struggle with Seattle as a place where entrepreneurially-minded people choose to be, as opposed to just talented people who work in tech. The only way you turn the crank on that is to get more great companies that scale and raise money and go public here. We’ve had increasing success at getting companies to be founded here by folks who moved here to work for Microsoft and scaled their own companies and made themselves and their early employees really rich. That’s the story of how you get people out of an employee seat and into the founder seat. Our velocity is slowly increasing there but we’re still much more of a company town than some of the other major tech cities.
I believe founders are people who don’t fit in the corporate world. Some people realize that sooner than later. Sometimes the golden handcuffs make it harder to unwind. But most founders realize they aren’t happy working for other people. In any population, that’s going be a small percentage. With more population of talent, the higher the number of potential founders. But it’s always going to be a tiny slice. Most people are happier having a job.
GeekWire: With Techstars Seattle specifically, what have you seen change over the years?
DeVore: Getting money into good companies has become easier in the Pacific Northwest. It used to be hard to find $1 million for a startup coming out of Techstars because there wasn’t a lot of angel money in the ecosystem and almost no institutional capital for seed-stage companies. In the last ten years, there’s been this explosion of micro-VC firms, particularly in the Bay Area, and a lot of them think Seattle is a great market. We’ve had increasing success at getting out of town seed investors to commit real money into this ecosystem. Getting $1 or $2 million for a great startup is a lot easier than it used to be.
The thing that’s gotten harder — or that we chose to make harder — is the realization of how lopsided the demographics of venture-backed founders have been. Companies aren’t just founded by white and Asian men. There are lots of founders who are women or African-American. Somehow we as a system need to think harder about how we’re sourcing and how we support founders from different kinds of backgrounds. It’s about challenging ourselves as a community and looking at the reasons for why we’re not being attractive to founders who look different. How do we open our doors and build relationships and change the narrative so that founders from different backgrounds see themselves in our work and vice versa?
We agree with the consensus view, that it’s really important as investors who are trying to make change in the world, to figure out how to make change in your industry. It’s something we care about and we have a ways to go. It’s a challenge we set for ourselves in the last few years that is a new kind of risk we’re trying to take and new type of innovation we’re trying to pursue with the platform as we mature.
Seattle entrepreneur Andy Sack (left) stepped down as managing director of Techstars Seattle in 2014, passing the torch to Chris DeVore, his longtime business partner and co-investor at Founder’s Co-op. (GeekWire File Photo)
GeekWire: What’s your pitch to founders? Why should an entrepreneur go through Techstars Seattle?
DeVore: In general, we’ve seen businesses that are further along and founders who are more experienced join our platform over time. We’ve been able to progressively attract more and more experienced founders. They have more options, yet they choose to work with us. It is the realization that there are lots of things about building a business besides raising money that are important and needed. Founders who can self-assess their strengths and weaknesses and say, ‘hey, if I can find a hack in 12 weeks that super saturates my network in an area of weakness, how much is that worth to me? Is it a couple points of equity to transform in a positive way or mitigate a risk in a powerful way by accessing the Techstars network in Seattle?’ Founders who come to that conclusion are the ones who opt in to the program. The ones who say ‘I got this, I don’t need any help, all I need is money,” are probably not the right fit for what we do anyways.
GeekWire: What do you think about the recent discussion around non-VC funding options?
There are always setbacks and near-death moments. It’s the human capacity for resilience and persistence every time that will turn a bad investment into a good one.
DeVore: It’s a super healthy push for clarity. We say ‘no’ all the time to founders — not because we don’t like what they are working on, but we don’t think their business is a fit for venture. The venture model wants one thing and one thing only, which is dominance and hyper-growth in a new category of innovation. And 99.9 percent of all startups do not fit that description.
Broadly, the media narrative around startups makes it feel like every business that’s successful is a venture-backed business. There are tons of super successful businesses and make a ton of money for their founders and principals that never take outside funding.
But the only thing I find wrong [about the discussion] is the idea that venture is trying to talk people into taking their money and they shouldn’t. I don’t think that’s ever been true. Good venture capitalists are very clear about what the model is good for and what it’s not good for, which is why they say no so often. They don’t want to be part of a business that’s not going to grow super fast and generate a liquidity outcome for everyone in 10 years. So anyone who thinks venture is somehow trying to get people, in a predatory way, to take money from businesses that shouldn’t doesn’t understand the economics and incentives in venture.
GeekWire: You’ve seen thousands of pitches. Any learnings with how you invest or what you’re looking for?
DeVore: Every time I’ve screwed up as an investor, I’ve fallen in love with an idea and used that as an excuse to overlook shortcomings in the founding team. When I really sit back and ask myself why I lost money on a deal, it’s because I knew there were things about my preferences around what founders I like to work with that were misaligned, but I ignored that because I was so excited about the idea they were working on.
I keep coming back to the same thing. If I choose amazing people that are working in some direction that I think has economic merit, scale, and disruptive potential, those founders will find a way to make it work.
Outreach is one of my favorite stories. The business they set out to build wasn’t working, but because they stuck together as a founding team and kept adapting and learning, they figured out how to find a productive thing. But that wasn’t because of where they started or the early metrics. It was because as humans, they were so committed and resilient and so gritty that they figured it out. And that’s really what you’re betting on. It’s a 10-year journey and it’s never always up and to the right. There are always setbacks and near-death moments. It’s the human capacity for resilience and persistence every time that will turn a bad investment into a good one.