TechStars raises the ante in the startup accelerator race

September 22, 2011

— Mark Boslet is a contributor for PE Hub, a Thomson Reuters publication. This article originally appeared here. —

Interest in seed stage incubators, accelerators and entrepreneurial funds continues at full bore, with companies, firms and universities all getting into the act.

Vodafone early this month opened the doors of its Silicon Valley research center to startups with the hope of encouraging faster innovation on its network.

Carnegie Mellon University, not to be left out, kicked off an accelerator at its Silicon Valley campus last month to give students a hands-on approach to entrepreneurialism. Menlo Ventures showed its determination last week by unveiling a $20 million Talent Fund designed to permit quick fundings of up to $250,000 to promising startups.

Now TechStars is increasing its bets in an effort to keep pace with industry guru Y Combinator. The incubator with locations in Boulder, New York, Boston and Seattle announced today $24 million in new funding from the Foundry Group, IA Ventures, Avalon Ventues, DFJ Mercury, SoftBank Capital, SVB Financial Group, RRE Ventures, Right Side Capital Management, TechStars Alumni, and several individuals.

The money will provide an additional $100,000 to every TechStars company in the form of a convertible note. The move appears aimed at matching Y Combinator, which at the start of the year announced that Yuri Milner and Ron Conway’s SV Angel would give each of its startups $150,000.

The TechStars program already offers startups that enter its three-month boot camp up to $18,000, or $6,000 a founder, in exchange for 6 percent equity.

Co-founder David Cohen told TechCrunch the rationale behind the extra money is to allow startups to remain focused on making progress instead of spending time on early stage fundraising.

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