IVCA Preview: Troy Henikoff, Managing Director of Techstars in Chicago, on Their Upcoming Demo Day on October 13th, 2015

IVCA Preview: Troy Henikoff, Managing Director of Techstars in Chicago, on Their Upcoming Demo Day on October 13th, 2015

September 30, 2015

One of the most successful start-up accelerator programs in Chicago is Techstars, an annual mentorship course that allows entrepreneurs, start-ups and companies to participate in a 13 week seminar that teaches them how to improve and execute their business ideas. The program culminates in Demo Day – which is a couple months later this year – taking place at the House of Blues in Chicago on October 13th, 2015. Troy Henikoff is the Managing Director of the Chicago branch of Techstars.

Techstars is an accelerator based in Boulder, Colorado, and has an outreach that includes 18 other location programs nationally and internationally. The Chicago branch began locally as Excelerate Labs – which was the brainchild of Sam Yagan (OK Cupid, Sparknotes) and current Chicago Managing Director Troy Henikoff – before it merged with Techstars three years ago. Demo Day has become one of the most anticipated investor events in Chicago, and Troy Henikoff spoke to the IVCA to offer a preview.

IVCA: You began a bit later in the year than usual for the Techstars program in 2015, with the usual August Demo Day now in October. What this just a scheduling issue or was it done with a purpose?

Troy Henikoff: It was simply a scheduling issue, to coordinate with some of the other Techstars programs going on around the country. It was still 13 weeks long, we just started a bit later and will end a bit later.

IVCA: As we've asked you the last three years – and now that Techstars is firmly entrenched as a mentorship program in Chicago – what improvements or alterations did you make for 2015?

Henikoff: We’re doing a few things differently this year. One, we focused on building even tighter relationships between the company founders both locally, and around the broader worldwide network. Locally, we instituted a new weekly session on Wednesday evenings. All of the founders participate and they share Key Performance Indicators [KPIs] with each other. This creates a culture of accountability and the founders are sharing their experiences with each other. In addition to KPI’s, they share their goals for the week and how they did on achieving last week’s goals.

Additionally we have them do a ‘high-low’ exercise, where each of the participants share their high point and low point of the week, and that can get a bit personal. This is about what is happening both inside and outside their businesses. This bonds the relationships between the 2015 participants, and will help build stronger lifelong relationships.

IVCA: What was the second change?

Henikoff: This was external, and it’s an experiment with Demo Day. We still have our regular Demo Day at Chicago’s House of Blues on October 13th, but it will start in the afternoon this year. During the morning, we’re going to have a special event for investors who have already demonstrated that they have invested in our companies in the past. It will give them an opportunity to meet in a more intimate setting with the founders and get to know them better. Then in the afternoon we’ll open the doors for the regular Demo Day event with all the bright lights and fanfare, it becomes more of a celebration.

Since this is an experiment, hopefully this build better relationships, and enable the entrepreneurs and investors to get to know each other a little better, rather than just be part of the crowd at the House of Blues.

IVCA: And finally, what third thing did you alter?

Henikoff: One of the challenges we’ve always had when recruiting is that entrepreneurs do not always appreciate the value of the Techstars program before they have been through it – a handful of them have even pushed back, saying that the 6% equity that Techstars receives is too much.  My reply to in the past was that if they did not see how the program would make their company 60% more valuable, a 10x return, then they shouldn’t do it. I actually think that we add much more value than that for most companies, but it was always so difficult to convince people that had not yet been through it.

In this last year, we instituted a new ‘Equity Back Guarantee’ at the national level. If a company goes through the program and feels for any reason it was not worth the 6% level, then they can name what they think it was really worth – they can even go to zero. The point is we’re putting our money where our mouth is.

Since this guarantee has been instituted, 180 companies have participated under it, and none has asked for any equity back. So 180 out of 180 have said it’s worth it. That’s a great testament to what we are doing to help these companies!

IVCA: What success stories have occurred in the past year from former participants in the program?

Henikoff: Yes, we have had a couple of exits and of course some fundings, including the $20 million that SpotHero just announced. They were from the class of 2012.

IVCA: In 2015, the ten companies selected for the program culminating in Demo Day run the gamut from financial services to dog walking. What is the thread of all ten of these start-ups, and what do you believe got them the opportunity to participate?

Henikoff: We’re still looking for the same thing – great entrepreneurs who have a business that is good enough that for the Techstars program to accelerate. There is the old saying, do you bet on the jockey or the horse? In the very early stage of a business, many of them change their direction or change their business model. What is consistent is the entrepreneur – the jockey – and that’s whom you bet on.

Some patterns do emerge – a couple years ago it was food companies, this year we have two financial services companies. There are also a couple of ‘FinTech’ [Financial Technology] companies which have always been in Chicago, but more behind closed doors. With the participation of AkoubaCredit and Glidera, they are taking the FinTech roots that Chicago has, and applying it in a broader way. We don’t go into any year thinking particular themes will emerge, it just happens that way.

IVCA: On the Techstars website, it touts itself as the number one startup accelerator in the world. What do you think you are doing best to earn that ranking?

Henikoff: Number one and number two are Techstars and Y Combinator. The Y Combinator does a fabulous job. with a different and more geographically concentrated approach – everything happens in the Bay Area in California. They also are different in how they work with the companies, and they take a batch approach and bring in many more companies at once.

Techstars is a very hands on approach. We only accept ten companies at a time and work very closely with those ten every day. Techstars is not just in Chicago, but this model is repeated now in 18 locations around the globe, and still growing. We are building the largest interconnected network of entrepreneurs, mentors and investors in the world.

IVCA: What kind of feedback over the years have you gotten from the mentors in the program, and how does that feedback play into the adjustments you've made in the program over those years?

Henikoff: The most common feedback we get from mentors is that they would like to have the companies keep them more involved.  We strongly encourage the entrepreneurs to be great communicators and build those relationships, but with over 160 mentors, it is just difficult to keep up with everybody.

IVCA: Since you've been doing programs like this for a number of years, how has the marketplace for new ideas changed – in your opinion – and how has that change made programs like Techstars more important that ever?

Henikoff: As the marketplace has matured, they have recognized that the value of a business is in the execution and not necessarily the idea. If you go back to the beginnings of the tech investment era in 1998 and 1999, the idea was king for Venture Capital, but now as we’ve gone through many market stages and have matured, the execution and type of entrepreneur has become more important.

We’re more focused on how we help that entrepreneur, not just in the 13 weeks they are with us, but in the future – once you are in Techstars, you are in Techstars for life. We have Techstars Connect, a software platform linking all Techstars alums. We have an annual conference called ‘FounderCon’ for alums, that attracts participants from around the globe. In addition, as our alums have success, they give back as mentors and sponsors, which completes the circle.

IVCA: Who are the main speakers for Demo Day?

Henikoff: We have two speakers each year, one keynote and one alumni. The keynote speaker is Mike Gamson. Mike is one of the most active angel investors in Chicago and a HUGE supporter of the community, and is an amazing speaker. The alum is Mark Lawrence, the Founder and CEO of SpotHero.com. They have had a lot of success since their Demo Day in 2012, and I hope he will share some great stories from it.

IVCA: Give us a reminder again of the date for Demo Day, and are there any new events associated with it?

Henikoff: It’s at the House of Blues, as usual, and October 13th is the invitation-only event for investors and participants. We are having a public event on October 22nd at the Northwestern University Law School auditorium, and all the companies will participate in that again. We’ll be posting about that soon. It’s a good way for introducing the concept to a new audience.

Techstars Demo Day is Tuesday, October 13th, 2015, at the House of Blues – 329 N. Dearborn in Chicago. Click www.techstars.com/programs/chicago-program/ for more information. Follow Troy Henikoff on Twitter @troyhenikoff