Techstars and YCombinators for later stage startups, who are you?

May 24, 2011

Later stage entrepreneurs deserve better resources and mentorship

Like many other venture capitalists, I spend a lot of time following the major technology publications and other VC blogs, as well as participate in the startup and entrepreneurship events in the Boston area. In recent years, the quality and quantity of such resources and events have increased exponentially, to the benefit of the whole industry. In particular, as many people have written, there is no better time than the present to start up a company. The barriers to entry are low and being eradicated with open source technologies and cheap cloud computing resources. Early customer acquisition is being aided by the explosion of social networking and the growing interest and use of smart devices. Furthermore, entrepreneurs today have plenty of resources to rely upon, most notably the growing ecosystem of startup accelerators, mentors and angel investors. With programs like YCombinator, Techstars and their clones all over the country, as with the growth of microseed funds with a massive investment scope like 500 Startups, or with the socialization of angel funding via AngelList, entrepreneurs are courted everywhere to start companies, join these programs and secure funding. Thanks to this agreeable climate, startups have propped up everywhere, and a good indication of this is the difficulty software companies are facing when recruiting for developers and designers since many of the best are too busy starting companies on their own.

There is now even a whole online literature on how to ace the YCombinator application or dominate the Techstars demo day, and it has been reported (by Techstars) that there are more than 100 cities that want to replicate their model. Clearly, this is the best time to be an entrepreneur.

Not really! It is mostly true if you only consider the prototypical entrepreneurs in the mindset of most people: a pair (since co-founders are better, according to YCombinator) of founders with lots of brain, brilliant technical skills and a cool product, or an idea of a product. For those entrepreneurs, the world is now their oyster – they have everything going for them, as we have discussed above.

But what about the people who started out a few years before all of these accelerators have come en vogue, or companies that follow a different path? They are different because their company actually has a product, revenue, and a staff of people who do development, support, sales and maybe marketing. Are there programs or mentorship opportunities for them? These entrepreneurs are now too busy selling, responding to customers and hiring and firing people to be sitting in a classroom listening to coaching from VCs and other successful entrepreneurs. They also have serious business issues they have to address everyday… decisions that affect their business’ bottom line and their employees’ livelihood. Is there a program that supports them, that gives them some advice, some help, some connections that will make their lives easier?

You would say that there has always been such a program, and it is called the Venture Capital Industry. But I think that the industry has not done enough. VCs at this stage (which is just after the startup phase, but before the company has become really substantial with millions of dollars in revenue) are still “early stage” VCs, and each VC will have tons of companies that he or she is managing, and will not have the time to mentor the companies, nor to offer them a structured support program to help when they need. That is also why OpenView started OpenView Labs and the OpenView Labs website… to create a resources site for entrepreneurs in this stage.

But for the most part, there just seems to be little interest in understanding and explicating the trials and travails of companies in that middle stage. Most blogs are all about new technologies, cool startups, funding news and big acquisitions, but not many talk about the times when companies are quietly working away to build up their momentum, to grow their business before they hit the big time. The accelerators programs are very much focused on the prototypical startup, and if you look at Techstars’ roster of companies, you will find that most of them have been acquired at an early stage, or are still in a very early stage of a company’s lifecycle. They have not even yet reached the middle or expansion stage that I am describing. So how can the rest of the industry know any better?

But all the while, they have been really unserved and unnoticed. Even in our relatively small portfolio, we already see some companies that essentially skipped the “startup” stage for the most part. They rocketed to millions of dollars in revenue, and essentially had to build out the whole team within the first few years. They accomplished this without having the whole mentorship and network support the startups enjoy, mostly because they had no time at all. Nobody knew about them, nobody mentored them, and nobody learned from them. Imagine how much more successful they can be with the right mentorship and support.

Expansion stage companies are tackling some really difficult problems, yet their trials and accomplishments are little noticed and little told, to the disadvantage of everyone. This is a big void that should be fixed by members of the VC and startup community because surviving the expansion stage is essential to reaching the end game.

Chief Business Officer at UserTesting

Tien Anh joined UserTesting in 2015 after extensive financial and strategic experiences at OpenView, where he was an investor and advisor to a global portfolio of fast-growing enterprise SaaS companies. Until 2021, he led the Finance, IT, and Business Intelligence team as CFO of UserTesting. He currently leads initiatives for long term growth investments as Chief Business Officer at UserTesting.