Yesterday, I posted about some concerns I had about Techstars. The post came across a bit more harsh than I intended (I’m a coder not a writer), and I’ve received a lot of feedback from both the Techstars crew and several of their participants. However, some of my concerns still stand.

$6k per founder is not enough to be the sole source of seed money. Based on a few quick exchanges with David Cohen at Techstars, it’s clear that this is intended. The capital provided is to help, but not sustain a company. While I agree that Techstars shouldn’t be fully funding their companies for a long period of time, I think that covering the cost of living for the founders for the 3 month course wouldn’t be unreasonable.

On a separate note, part of my concerns are clearly a result of my misunderstanding about the purpose of seed money. Most of the events I’ve attended are focused on companies that have already started and are looking for Angel or VC funding. At these events, it’s always been implied that seed funding is generally enough to get the company running and ideally have a first product ready to ship. Based on what I’ve been reading, it looks like most organizations that provide seed funding are more focused on providing connections and expecting the founders to front the capital.

In the end, there are really 2 core problems:

1. Organizations like Techstars work best for founders who already have some capital, rather than founders who are just starting.
2. There is a lot of confusion and mis-information around about how start-ups get going before they receive Angel or VC funding.

Based on these problems, there could be a variety of solutions.

For companies like Techstars and Y-Combinator, it would be interesting if the system would still work if founders recieved $10k-$12k. This would cover cost of living for the founders for the 3 month program, but is still low enough to encourage them to keep moving forward. Based on the potential gains, this seems like a relatively inconsequential amount and it would open the doors to a lot of talented people who don’t have access to capital.

It would also be great to see a few events targeted at pre-seed entrepreneurs. It’s clear that Techstars and similar groups have worked for lots of companies. It would be interesting to have  day to hear from organizations like TechStars, CRV, Y-Combinator and some of their companies to hear how others have made it work. It would also be great to give people an  idea of what it really takes to get though the seed phase. There are a lot of people like me, sitting around with prototypes and plans with no idea how to get that first beta to market or prepare for Angel or VC funding.

I owe the people at Techstars an apology. While their program doesn’t seem like a good fit for me in my current situation, it’s clear that they’re doing a lot of things right. It’s just frustrating to see great ideas that could become multi-million dollar companies fail because the founders can’t borrow that first $30k. It’s tough to walk through BarCampBoston or Ignite and see dozens of great ideas that will never see the light of day.