Techstars, a national network of accelerators and a venture capital firm, is partnering with Grinnell College to launch Techstars Iowa, to be located in Des Moines.
Des Moines entrepreneur and former interim director for the Iowa AgriTech Accelerator Kerty Levy has joined as managing director of Techstars Iowa, which has yet to settle on a physical location in the metro. The accelerator will accept up to 10 Iowa-based startups for the first class, scheduled to run for 13 weeks from September to December 2020. Grinnell and Techstars representatives announced the planned launch this morning at fintech startup Dwolla. Applications for startups will open on Feb. 17 and will be accepted through May 10.
“We believe that talent is everywhere and opportunity is not,” said Ivan Lopez, general manager of accelerators for Techstars’ western region. “There’s an incredibly thriving and viable technology and entrepreneurial community in Iowa, in Des Moines and in other cities, but the opportunity for venture capital for these entrepreneurs and people who come from idea to product and market is more complicated.”
Techstars has 46 accelerators announced or operating internationally with plans for continued growth, although Lopez would not say how many more accelerators are being planned. By the end of 2019, Techstars will have more than 2,000 companies in its portfolio, he added.
“Techstars … really spends time understanding what the strengths and weaknesses and the needs of the local communities are before starting a program,” said Jainen Thayer, chief investment officer for Grinnell College. “Whereas other groups have a platform where they basically roll out a one-size-fits-all central accelerator, what Techstars is trying to do is really tailor each location to the individual communities in which they’re operating.”
Grinnell is funding the first three years of Techstars Iowa to ensure the program is established and to “make an evaluation of the impact the program is having,” Thayer told the Business Record.
Techstars awards a $20,000 initial investment to each chosen startup, or about 6% equity; Grinnell will receive half of that equity, Lopez said. Each startup has a follow-on opportunity through a convertible note of $100,000, he added.
The partnership between Techstars and Grinnell College has been about a year in the making, Thayer said.
“One of the things that struck me about Iowa was that within a relatively concentrated geographic area, the diversity of economic activity within the state is actually pretty remarkable,” Thayer said. “The thing that seemed to be missing was how do you go from having a successful business plan or idea or fledgling company at one of the accelerators to being at a stage where somebody like Next Level [Ventures] is going to be interested. … There wasn’t that bridge of where do they go next, what do they do next. That’s a tremendous opportunity from an investment standpoint.”
Grinnell will aid in building out the mentorship network using Grinnell faculty and alumni, and will also consider ways to connect students with participating startups for internship and postgraduate work opportunities. Typically, Techstars startups will meet between 100 and 200 mentors during the initial four-week period and select up to five main mentors.
The accelerator is “stage-agnostic” and accepts tech startups in all sectors, from early-stage companies to those that are already raising capital, said Claudia Reuter at the morning launch. Reuter is managing director of the Stanley + Techstars Additive Manufacturing Accelerator, and joined Thayer and Levy at the announcement this morning.
“We really want to take what is often two years of struggle, pivot and development, and we consolidate that into 13 weeks and help these entrepreneurs connect with the community, investors and strategic advisers,” Reuter said.
Levy was recommended to Techstars by another managing director in the accelerator’s network before Techstars internally announced plans to look at Des Moines for a location, Lopez said. Levy previously served as the interim director at the Iowa AgriTech Accelerator during the 2019 cohort, and has been an entrepreneur-in-residence for the accelerator. She is the founder of KNLWorks and has worked for Kemin Industries, Technomic Consultants, the Boston Consulting Group and two e-learning startups based in San Francisco.
“I feel comfortable in the broad tech space. I think there is a lot of opportunity in Iowa in broad tech, and I think we can leverage so much of what’s already been created in the startup ecosystem and work together to enhance it,” Levy told the Business Record.
The program manager will coordinate day-to-day activities and support for startups during each class duration. That position has not yet been filled, but will be filled at least two months before the first class arrives in Des Moines, Levy said.
“My role is to find the companies — to make sure that our pipeline is fantastic, and that we pick the best 10 companies to come through,” she said. “My role is also to ensure that we have the investors and opportunities on the back end of the program who are ready to work with these companies and truly help them accelerate to the next level.”
Grinnell and Techstars are seeking additional partners to bring support to the Techstars Iowa program. Interested parties may contact Levy at kerty.levy@techstars.com.
“If this is a really successful accelerator, hopefully we have everybody in town that you can think of, corporations and otherwise, wanting to put money into this and support it,” Thayer said.
“We are definitely playing the long game. This is not about short returns or short-term gains,” Lopez said. “Ideally we continue to build and stay in Iowa for the long term.”