Today TechStars announced it raised $8 million from more than 50 different venture funds and 25 angel investors in order to fund TechStars programs in all its cities for the next four years or so. In the past, TechStars would raise one fund per session in each city–twice a year.
“We were oversubscribed. We had to limit the amount of money people put in,” CEO David Cohen said. The goal was to get a broad number of investors from the local ecosystem to get the community literally and metaphorically invested, he said.
“To be an investor in one of our programs, you have to an active investor in that community. We wouldn’t take money from Russia for New York,” he said.
The terms are the same for all the investors, although the budgets for the programs vary by city (New York has a bigger budget than Boulder). TechStars takes a stake in the companies that go through the incubator, and then investors take a stake in TechStars. “The first two yrs of TechStars have already been profitable for investors,” Mr. Cohen said.