techstars la
Techstars' 2021 class of Los Angeles startups graduates this week as the accelerator comes to a close with its Demo Day.
The 12 companies will show off their work, which ranges from a stroke-detecting wristband made by Alva Health to a social network for stock traders called Cheres and Renno, an app for home renovations. If you're about to go to small claims court and need help filing paperwork, there's an app for that, too – Techstars also backed PeopleClerk, which uses its system to help California residents file in any one of the state's 58 counties.
For the past three months, each company has been working under the guidance of Techstars mentors remotely and at their Culver City offices to develop its final product, which will be shown off to investors and interested potential customers Oct. 14 during an investor showcase at the Petersen Auto Museum.
In addition to each company receiving a $20,000 grant at the onset of the program in exchange for giving Techstars 6% equity in the company, the pitch day is potentially a very valuable opportunity to court new investors and keep the business' momentum going.
Of the dozen companies that have participated in the accelerator, Techstars L.A. Managing Director Matt Kozlov said about half have– or are in the process of closing – funding rounds outside the Techstars model.
"A couple of the companies will have actually already closed rounds by Demo Day, which is pretty exciting," Kozlov said. "Some of the companies are so hot that the deals kind of ran away with themselves before the rest of the world got a chance to meet them, which is great for our founders and we're proud of them."
One of those companies is Sanity Desk, which makes software for small businesses to help them manage marketing and customer service. Sanity Desk CEO Samuel Cook said the company raised $116,000 during the program from investors outside Techstars and $1.9 million since launching in 2019.
Cook said that working with Techstars helped Sanity Desk boost its revenue by focusing on offering its product at a free or discounted price to reel in new customers. He noted Sanity Desk's monthly revenue grew 15% in September and expects the startup to hit $1 million in annual revenue by January 2021.
"The biggest breakthrough we had from the program was learning through our mentors how we could grow our revenue to $1 million in annual recurring revenue before we raised our Seed round," Cook said. "The advice we received in raising and how to raise will greatly increase our valuation at the time we raise. Plus the network and skills we have to raise will make it much easier than it would have been."
The demo day is virtual because of the ongoing coronavirus pandemic, but Techstars LA embraced a virtual and in-person hybrid model this year. The investor showcase will be in-person, and throughout the three-month mentorship period startups met both in-person and online -- Kozlov said one mentor even moderated a class while docked on a yacht.
Kozlov said Techstars will likely continue a hybrid model of in-person and virtual experiences in its future classes regardless of the pandemic, because it allows more companies to participate.
"We came to TechStars because we were looking to raise money, but the real value we got was from the mentorship and the confidence we gained to grow our business with these mentors," Cook said. "Also, the other founders in the program are a huge source of strength and inspiration to me that I can rely on them for advice, connections, and support through our journey after the program."
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One of Southern California's top accelerators has named Matt Kozlov its next managing director, marking a shift to jumpstarting more deep-tech startups.
Kozlov succeeds the popular Anna Barber, who departed Techstars Los Angeles Accelerator in November to become the first head of M13's venture studio and a partner at the firm.
"It's certainly big shoes that I'm filling," Kozlov said. "I'm quite humbled by it, to be perfectly honest."
Kozlov is not new to the Techstars franchise, having previously led Techstars' Starburst Space Accelerator and Healthcare Accelerator.
"I've spent the last five years working with startups that are a little bit more regulatory-based with longer sales cycles, which I think is actually a really great background to bring," Kozlov said.
Kozlov and Barber are friends and Barber said it was Kozlov who helped show her the ropes at Techstars when she joined in 2017.
"Because he's been a mentor for the L.A. program, he also knows the whole community and can seamlessly step in, although I fully expect him to define his own thesis and take the program to a whole new level," Barber said.
Both began their careers with two-year stints in management consulting, Kozlov at Bain and Barber at McKinsey. But while her background is more in consumer technology, Kozlov has roots in deep tech in addition to stints in executive roles at Sony Music Entertainment and TeleSign.
"I'm very excited about the deep-tech market here in Southern California – pharmaceutical, aerospace, defense, health care, and robotics," Kozlov said. "The industrial base in Los Angeles is so complex and so varied and my own career I think reflects that."
Kozlov says with no offense to those developing mobile video games or entertainment startups, he generally looks for founders who want to aim higher to solve big problems in areas like healthcare or aerospace.
"I'm looking for humble coachable founders who are deeply passionate about solving the problem they're going after, and ideally that problem is something that if they are successful in solving, it will actually make the world a better place," he said.
One thing he said will not change in Techstars' commitment to backing diverse founders.
"Los Angeles is a diverse community and our entrepreneurial investments should reflect that," he said.
Founders who have been mentored by Kozlov say he brings a high degree of both empathy and analytical rigor to his job.
"He is always willing to roll up his sleeves and do the work in the trenches, in the best of times and the worst," said Dante Tolbert, who graduated from the 2017 healthcare accelerator when he was CEO of Cerebro Solutions, a startup that helps hospitals manage clinicians and labor costs.
"Matt brings that rare combination of analytical rigor, a solid understanding of key KPIs (key performance indicators) and milestones for early-to mid-stage startups, and incredible people skills to build strong networks and partnerships," said Wout Brusselaers, founder and CEO at Deep 6 AI, a startup that helps hospital companies with analytics that was part of the 2016 healthcare accelerator.
A total of 40 companies have gone through the three-month Techstars Los Angeles Accelerator during the past five years. Collectively, they have gone on raise over $126 million and have a combined market cap of $328.6 million. Standouts include Slingshot Aerospace, Blue Fever, Stackin, Fernish, Liquid, Dash Systems and Finli.
However, some have questioned whether accelerators provide the necessary value to startups to justify the cut of equity, which in Techstars' case is 6%. That is especially true in the pandemic, when Zoom meetings have replaced most in-person interaction. Not surprisingly, Kozlov disagrees.
"Whether it's in person under one office building or distributed across Zoom rooms, I've learned that it doesn't really matter," Kozlov said. "It's certainly a lot more fun when you're able to grab a real meal with somebody or really just spend long nights talking about your challenges, but what I've learned is that by bringing this community together to support these ten startups at a time, magic happens. It's different than building your business out on your own."
On the plus side, Kozlov says deals have been closing faster during the pandemic and mentors have more time on their hands since they are not traveling or commuting.
"There's actually a little bit more time to pay it forward," he said.
Applications for the Techstars LA 2021 program are open now through April 11, a cohort that Kozlov expects to once again be remote with perhaps some in-person interaction by the end.
"I guess you and I are probably going to assume that it will be a virtual program unless we can hurry the pace of vaccinations," Kozlov said.
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Anna Barber, who has served as a mentor to countless early startup founders and headed the Techstars LA Accelerator for the past three years, is leaving to become the first head of M13's venture studio and a partner at the firm.
"I was not looking for a new role, but you literally couldn't design a more perfect opportunity for me," Barber said. "It was too good to pass up."
Unlike traditional VC funds that invest in other founders, a venture studio starts companies of its own. The model has been increasingly popular and the Santa Monica-based firm rolled out its studio, Launchpad, last year. Its first company is Rae, a line of affordable women's wellness products available at Target, Anthropologie and Urban Outfitters.
Barber says the studio model is appealing, especially at M13, because the firm can use its extensive network of connections with corporate partners to help young startups get a toehold with consumers.
"I think we're in a time where it's easy to start a company but hard to build a great company," she said. "It's easier to get to market, but harder to compete."
Barber said she was attracted to M13 because it truly wants to support founders, and most of its partners were operators before they were investors. Co-founders Courney and Carter Reum started the firm after they sold their spirits business. Gautum Gupta, a San Francisco-based partner, started NatureBox, a digitally native brand of snacks.
"They have a high degree of empathy for founders," Barber said.
Barber will be one of three female partners and she said the firm's efforts to have a diverse workforce and invest in underrepresented founders was also important. She also cited M13's culture as a reason for making the switch.
"Everyone is really nice," Barber said. "It's filled with kind people. That's something I look for."
Barber started her career as a corporate lawyer and was a strategy consultant at McKinsey & Company. She moved to tech in 1999, just as the dot-com bubble was bursting, as an executive at two ecommerce startups, Petstore.com and Rentanything.com.
Barber will retain her role as a partner at the Fund LA, the early stage fund of local founders and operators, which she helped start earlier this year. (M13 is a limited partner.) She also hopes to continue to be a mentor for Techstars, noting that members of the accelerator often say they are part of "Techstars for life."
During these COVID times, starting a new job comes without the rituals of figuring out a different commute or decorating a new workspace. When Barber starts her new role December 1st, she will be working from the same place she has since the pandemic began – her house in the Valley.
"I'll be logging into Zoom with a different email address, essentially," Barber said. "It doesn't feel like the massive shift that it actually is."
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