Getting into an incubator means money, mentors, and connections. We went inside the application process at a prestigious business incubator.
"Oh, boy."
"I can't take it seriously."
"This is literally insane."
"This is atrocious."
"Jesus Christ."
There's something about being continually exposed to the wildest dreams of others that wears on the soul. A long-shot bid for greatness, for true love, or for wealth can be inspiring. But watching many, many long shots has a way of making a person cynical.
The same is true for start-up pitches, which are, almost by definition, long shots. A good pitch can be intensely emotional. "You almost want to see the founder cry," says David Tisch, a 30-year-old angel investor and the managing director of the New York program of TechStars, a business incubator that is now in five cities. "You want to feel that for the past 10 years, they've only been thinking about this one thing. That's how you know they're legit."
And yet, when you've seen thousands upon thousands of start-up pitches, when you've been sold every idea a dozen times-;Kickstarter for small business! Second Life 2! MySpace for live music!-;you can be forgiven for being dismissive; or, in the case of Tisch, for yelling "Douchey!" three times in quick succession as he sits in an empty office staring at his computer screen.
On this particular morning, Tisch is focusing his disgust on a twentysomething entrepreneur with a bold plan (aren't they all?) to revolutionize (per usual) the cosmetics industry. She comes recommended by the founder of a billion-dollar e-commerce company. Her start-up has actual customers-;it has pulled in roughly $100,000 in its first six months-;but Tisch has concluded that she isn't capable of turning it into a big company. "Look," he says, talking primarily to himself. "We have to take this seriously. It's funded by people we know. It's a real market. But the founder is a flutey New York person."
He fires off an e-mail to an investor in the company-;"I kind of hate her," his note begins. Tisch, who shoots me a conspiratorial smile as he hits Send, does not in fact hate her. The grandson of the media mogul Larry Tisch, he is one of those New York types who can be both crass and charming at the same time. In this instance, he wants to see how the entrepreneur's investors defend her in the face of criticism. If they respond forcefully, Tisch will put his first impression aside and give her a chance. "I'll watch this one," he says.
The date is January 24, one day after applications were due for TechStars, a three-month mentorship program that is part boot camp, part investment fund. Some 1,480 young companies have filled out a questionnaire and recorded two short videos for the chance to compete for just 14 spots. That works out to an acceptance rate of less than 1 percent. "Look to your right; look to your left," Tisch said at a recruiting event in early January, modifying the Harvard Law School warning to first-year students. "Probably none of you will get in here."
And yet here they are, showing up at happy hours, sending weekly e-mail updates about their progress, or even, in the case of one group of co-founders, flying to Boulder, Colorado, to pay an unannounced visit to TechStars's national headquarters. There are teams from San Francisco, Seattle, Rome, Bucharest, and Tokyo. There are Harvard M.B.A.'s, former investment bankers, and even a guy nominated for a 2012 Academy Award (best documentary). Some entrepreneurs have applied for the money-;each company accepted into TechStars will immediately receive $118,000 in start-up capital-;but most of the strong candidates raised at least a few hundred thousand dollars even before they applied. One company raised $2.5 million.
I spent most of January and February following this mass of founders, almost all of them in their 20s and 30s. I watched dozens of candidates make their cases-;and then sweat and stammer as they were peppered with follow-up questions delivered with calculated hostility meant to test their resolve. ("Can you build this company without him?" was one question Tisch would often direct at one member of a two-person founding team.) I attended the meeting in which a coterie of the city's top investors, TechStars's selection committee, made its recommendations. I saw the relieved expressions of the young founders when they were told, Yes, you are, as you always thought, one of the elite. I talked to the losers after they had gotten the bad news.
Of course, I read the applications. Though the most promising candidates tend to cultivate relationships with Tisch and his deputy, Adam Rothenberg, long before they formally apply, there are always a handful of what Tisch calls "random companies that show up on the last day and make you go, 'Wow.' "
For the moment, the top of the slush pile is occupied by a company that for the purposes of this story I will call CrowdFundMe. The founders are engineers based in the Czech Republic, aiming to build a crowdfunding website for people outside the U.S.
"OK," Tisch narrates. "They met eight years ago while working for a website. So they know each other." That's a good thing-;founders who have long relationships generally have higher rates of success than those who met recently. Another good thing: CrowdFundMe has raised $500,000 from angel investors.
