Techstars is set to invade Canada, and they’re doing it with a little help from their friends in Montreal.
MTLinTECH has learned that Techstars and Real Ventures are jointly establishing a new Techstars accelerator program in Toronto. The Boulder, Colorado-based Techstars and the Montreal-based Real Ventures will invest equally in the project, while the program will follow Techstars’ funding model and operations.
Real Ventures’ John Stokes explained why the timing was right for his team and for Techstars to enter Toronto. Both firms, he said, share a belief in “creating strong and collaborative communities to build great startups.”
“When you look at what’s been going on in Toronto recently, those ‘established’ traditional accelerators haven’t really existed,” Stokes told MTLinTECH. “So the question was whether there was opportunity to do something in the Toronto-Waterloo corridor, and I think we saw that. Rather than taking FounderFuel to Toronto, we thought the idea of working with Techstars was a much stronger benefit for Canada.”
This will be the first time Techstars has ever partnered with another accelerator to run one of its programs. However, co-CEO David Brown told us that the organization has partnered with various limited partners, often venture firms, in nearly every market it has expanded to.
“Canada is close to us”
Brown is a born-and-raised, bilingual Montrealer hailing from Outremont. He moved to the United States over 20 years ago because of the lack of opportunity at the time for high tech workers. Things are different today, he said.
“Canada is close to us, it has lots of great entrepreneurs and it’s my citizenship, so it made all kinds of sense. We’re in the business of helping entrepreneurs succeed all around the world,” said Brown.
“We have a very symbiotic relationship with Real Ventures,” he added. “They’ve invested in a lot of companies that have been through Techstars and they have a great program in Montreal. There’s great opportunity in Toronto and we’re really happy to partner.”
Techstars was founded in Boulder in 2006 by David Cohen, Brad Feld, David Brown, and Jared Polis. Today it holds 13-week programs in Boulder and nine other American cities, London, Tel Aviv, Cape Town and Berlin. It’s considered one of the best startup accelerators in the world next to Silicon Valley’s Y Combinator.
Along with “city-driven” accelerators, Techstars also runs sponsor-driven programs, like the Target program in Minneapolis, Minnesota. There, startups benefit from and gain access to corporate companies.
Just last week MTLinTECH reported that Techstars’ Canadian entry could be in Montreal, but that there was “just as much potential for the Toronto-Waterloo corridor to be chosen as an expansion point.”
Stokes and longtime partner Alan MacIntosh first travelled to Boulder in 2009 to meet the Techstars group, before Real Ventures created the FounderFuel progrm. In the years since, Real Ventures has invested in Techstars graduating companies and co-invested alongside Techstars Ventures into other companies, Canadian or US-based. Real Ventures even invested in the Techstars Ventures fund.
As well, several companies that graduated FounderFuel have gone on to participate in Techstars, usually in the US.
The match seems both a prudent and logical fit, particularly for Real Ventures, Canada’s most active early stage venture fund.
Neither Stokes nor Brown would go into specifics on financials, but our guess would be that the two sides will split the funding equally.
“We’re equal partners in creating this,” said Stokes.
The program will officially be a Techstars endevour, part of the global Techstars network. FounderFuel’s leadership team is expected to work together with the new Techstars Toronto team. It’s also likely, according to Stokes, that Real Ventures and Techstars will share office space in the capital city of Ontario.
Real Ventures has gradually been writing larger and larger cheques, evolving from its once-singular identity as a strictly seed-stage funder.
“Established accelerator model was really no longer operational in Toronto”
At the same time, there’s been a growing opportunity for a legitimate accelerator program with worldwide appeal to enter the Toronto market, particularly after the former Extreme Startups dissolved a few years ago. How much success Real Ventures would have had on its own remains unknown. By partnering with Techstars, it likely increased those chances dramatically.
“The established accelerator model was really no longer operational in Toronto, but the focus for Real Ventures outside of Montreal has been more on slightly more mature companies. While we had observed Toronto, it’s something which we felt a lot more comfortable in doing it in a partnership rather than on our own,” said Stokes.
One could assume that a large global brand like Techstars could have funded its own Toronto endeavours.
Brown and his colleagues didn’t feel that way though.
“Were not in the business of trying to push anybody else,” said Brown. “Sometimes it’s not a matter of not being ready, or that the location isn’t ready for us, it’s that we haven’t found the right partner to do it in a quality way. Real Ventures is on the ground and they’re 10 times stronger than us in things like finding the right team. They’ll help us find the right mentors and attract great companies.”
Stokes said he thinks Techstars felt “that they trusted us and they knew they were dealing with an organization that could help augment value by the networks and relationships they had.”
Since its inception in 2006, Techstars has successfully operated more than 100 accelerator sessions in 18 cities and now has more than 1,000 companies in its portfolio.
Application and program details for Techstars Toronto will be announced later in 2017.
“I think there will be plenty of opportunity to start in Toronto and expand in Canada”
As for our first unsuccessful guess at Techstars’ future, it’s clear that Brown would one day love to see a program in his home city of Montreal.
“Oh, 100 per cent I’d like to see that,” he said over the phone as he got out of an Uber ride. “I think there will be plenty of opportunity to start in Toronto and expand in Canada from there, and I don’t know that Montreal is number 2, but its certainly a very logical choice.”