Companies accepted into TechStars New York get free office space, $18,000 in cash, $100,000 in convertible debt, and access to 150 mentors—the list includes Fog Creek Software founder Joel Spolsky, venture capitalist Fred Wilson, and Foursquare founder Dennis Crowley. At the conclusion of the program, graduates take the stage at New York City's Webster Hall to pitch their companies to hundreds of reporters and investors. In exchange, the program takes a 6 percent stake in each company.
For most entrepreneurs, that's a small price to pay. Of the 126 companies that have completed a TechStars program, only 8 percent have failed. By comparison, the failure rate for most technology start-ups is thought to be as high as 90 percent. The average TechStars company raises $1.1 million from venture capitalists, and some raise much more. "If you take a really talented group of people and give them intense mentoring, you sharply increase the chances that their company will be successful," says Hochberg. "I tell my M.B.A. students to apply for these programs. The model works."
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