Communities and startups can uplift each other. Noah Lenz, Senior Operations Associate at Techstars, shares some interesting insights with Silicon Luxembourg.
Techstars is a world-renowned seed accelerator that helps to catalyse founders, early-stage companies and support organisations, to create a more dynamic and vibrant start-up community. Its three-month accelerator programmes provide mentorship, financial assistance and growth opportunities to early-stage companies all across the globe. Not only does Techstars develop the individual and their business, it also helps to expand and grow communities and local economies.
Recent data from European Start-ups shows that communities in Europe understand the benefits of investing in innovation, as the continent currently has the most Unicorn cities, with at least one in 170 regions. Undoubtedly, start-ups breathe new life into communities by hiring local talent and building upon existing facilities and opportunities. A Balderton Report found that 64% of founders believe Europe is a prime location for start-ups, as many governments recognise start-ups as resilient economic and job growth engines that significantly boost the communities in which they operate.
What is Techstars about?
The Techstars worldwide network helps entrepreneurs succeed. Founded in 2006, Techstars began with three simple ideas – entrepreneurs create a better future for everyone, collaboration drives innovation, and great ideas can come from anywhere. Now we are on a mission to enable every person on the planet to contribute to, and benefit from, the success of entrepreneurs. In addition to operating accelerator programs and venture capital funds, we do this by connecting startups, investors, corporations, and cities, to help build thriving startup communities. The tools, insights and strategies Techstars offers through its programs and services are based on the experience of operating nearly 55 accelerator programs around the world, and having accelerated more than 3,300 companies to date. Collectively, the Techstars portfolio has raised more than $24.4 billion from investors and is worth more than $97.9 billion today.
“Europe’s startup ecosystem is characterised by high cultural diversity, relatively small domestic markets, and a fragmented regulatory landscape.”
Noah Lenz, Senior Operations Associate at Techstars
How can communities uplift startups?
Regardless of your stage, industry or geography, much of the entrepreneurial process is acquiring mission-critical resources, such as ideas, talent and funding. The startup community is the key mechanism for directing those factors to founders. This idea was shaped by our co-founder, Brad Feld, in his book “The Startup Community Way” and is deeply rooted in our DNA and activities at Techstars today. Community events like Startup Weekend, for example, are a catalyst for aspiring entrepreneurs to embark on the founder journey, meet like-minded co-founders, and engage with ecosystem players.
In the early days of a company, founders will find that their most valuable relationships are local. A dense co-location of startups, as well as a sustained engagement of the community, fosters tacit knowledge transfers or “learning by doing” effects which are critical to both true innovation, and tackling the highly complex activity of building and scaling a startup.
At Techstars, we equip community leaders, entrepreneurs and local investors with the tools and activities they need to ensure the local startup ecosystem can thrive for years to come. When entrepreneurs have the resources, tools and support they need to thrive, so too can the greater community and economy as a whole.
How entrepreneurs, in turn, can breathe new life into the communities that support them?
Founding a company is fundamentally a non-linear and non-exhaustive learning process. Whether you learn about your product, team, company, customer, or yourself, as a first-time founder or serial entrepreneur, your unique experiential knowledge cannot be taught in a classroom or book. One of the best ways for founders – accomplished or bankrupt – to feed back into their community is by becoming a mentor to nascent entrepreneurs. Mentoring fellow founders is not only highly inspiring, but it creates productivity advantages and opens unforeseen doors.
At Techstars, we have codified our approach to mentorship through documents like the Techstars Mentor Manifesto. One of the cornerstones of our mentorship philosophy is our ‘Give First’ ethos, to help anyone, especially entrepreneurs, without any expectation of getting anything in return. I encourage you to give it a try. You will be surprised at what you will receive in return!
What is the potential of communities in the European tech ecosystem? Is this a major advantage today compared to the American and Chinese ecosystems?
Compared to its American and Chinese counterparts, Europe’s startup ecosystem is characterised by high cultural diversity, relatively small domestic markets, and a fragmented regulatory landscape. In practice, this means that a London-based healthtech startup will have to expand within the UK, to DACH, France, and countless other European countries – each with different languages, customer behaviours, sales and distribution channels – to match a market similar to the size of the United States. A disadvantage right from the start. Startup communities have been instrumental in overcoming these particular challenges by unlocking market-specific resources and enabling rapid growth across the European mosaic. Our data from surveying over 1600 ecosystem stakeholders in our network confirms that “Community and Proximity to Other Startups” will be the second biggest driver of innovation in Europe over the course of the next five years.
Are communities improving Europe’s potential to foster and grow Unicorns?
Absolutely. If we look at the total number of unicorns minted over the past 5 years, Europe has experienced an exponential growth and shows signs of maturation. From a mere 20 total unicorns in 2018, startups like Volocopter, Qonto and Oura made Europe shoot past the 165 unicorn mark last year. And while 2021 was a year of frenzied capital and hyper-growth, valuations have been slashed. Stories like the on-demand delivery startup Gorillas – that reached unicorn status within 9 months – signals a new area of risk and growth culture in Europe known from the Bay Area. These founders shape communities like London, Paris or Berlin by impacting mindsets, creating access to late-stage capital, and minting seasoned talent that has weathered a startup and scale-up. Since success tends to breed success, it’s not surprising that 82% of past unicorns replicated within their own hometown.
Entrepreneurial recycling in startup communities is a key reason these outlier events have an outsized impact and will continue to foster Europe’s potential for unicorns.
