Photo courtesy of Chris Lynch. Photographer Virginia Franjul.
Photo courtesy of Chris Lynch. Photographer Virginia Franjul.

There is a bit of a turf war brewing in Boston tech for the hearts and minds of the city’s early stage startups. In one corner, you have Chris Lynch of Atlas Venture, and in the other, Fred Destin of … Atlas Venture.

An in-house Atlas feud? Not exactly.

A tiff between Chris Lynch and Katie Rae of Techstars?

That’s not quite it either.

In reality, the tension simmering within Boston’s normally “Everything is Awesome!” tech ecosystem has to do with two different philosophies on how to build a business. More precisely, the differences between the world of seed round venture capital versus the ever-growing community of startup incubators and accelerators.

Atlas Venture’s Chris Lynch, for one, has no problem declaring accelerators like Techstars are a fraud. Although easily the most vocal critic, Lynch is not alone among venture capitalists and angel investors who take issue with some of the practices of accelerators and incubators … he’s just the most vocal.

Seeding v. Accelerating

The whole thing started a few weeks ago when Lynch, who has become Atlas’s big data go-to guy, went off on incubators and accelerators at an event held by TiE Boston.

As my BetaBoston colleague Kyle Alspach wrote in the Boston Business Journal at the time, Lynch’s rant was pretty epic.

“My view on accelerators is they are, for the most part, invented to take advantage of this generation of people that’ve watched too many re-runs of The Social Network,” Lynch told the crowd.

One of the more scathing criticism’s from that night was Lynch saying that the success rate of most accelerators is lousy and that many local accelerators and incubators are run by people who don’t have any experience starting a company.

“They’re creating an industry around this, and I think that’s a shame,” Lynch said at the TiE Boston event.

The issues that Lynch brought up revolve around what is becoming a very crowded industry in the world of technology-focused startups: Incubators and accelerators.

For the uninitiated, startup incubators are usually longer programs that take great ideas and build teams around an idea to form a company.

Accelerators tend to run in two to three month increments and use networks of mentors and other resources to take up-and-coming businesses, who may be rough around the edges, and help them get to a point where they can grow into successful companies on their own. (Inc. has a great piece on the accelerator/incubator differences.)

The two most well-known incubators/accelerators are Y Combinator, which began in both Boston and Silicon Valley but eventually moved solely to the West Coast, and Techstars, which has programs in multiple cities with the Boston program arguably being the most successful.

Another local organization that does something similar is MassChallenge. However, what differentiates MassChallenge is that they don’t take any equity in the companies that they accelerate/incubate.

Techstars typically takes 6 percent in equity, while Y Combinator takes between 2 to 10 percent, but typically 6 to 7 percent.

And its the equity piece that gets Chris Lynch really fired up.

From Arlington Rocker to Big Data Guru

To understand Chris Lynch’s perspective, you need to better understand Lynch.

Lynch went to high school in Arlington and was part of the Boston underground/indie rock scene for a period of time.

Eventually, he powered his way into the high-tech business world and worked through a slew of notable companies and exits, including Cisco, ArrowPoint, Acopia Networks, Lucent, Bay Networks, Wellfleet Communications, and Digital Equipment.

While Chris was in charge of Acopia, the company was acquired by F5 Networks; he was the chief executive at Vertica when HP acquired the company for $350 million. Not too shabby.

Since joining Atlas, Lynch has built a portfolio of big-data companies that includes sqrrl, Hadapt, Nutonian, ThreatStack, DataRobot, and more.

He also was an angel investor in Hopper, Kinvey, and a host of others.

Looking at the companies that Lynch gets involved with, one thing should be clear: Chris Lynch is not looking for the next Facebook or Twitter. The companies he invests in are powering the backend of the Internet, building new infrastructures, and securing and analyzing data in various forms. Unlike many VCs, Lynch has no problem diving into companies with intimidating and complex technologies and highly advanced products.

Because Lynch is a self-made entrepreneur turned investor, it’s easy to understand why he feels compelled to stand up for inexperienced startups.

“The issue I have is when you get the most raw people who have no experience and take advantage of them,” he said.

For Lynch, the problems with accelerators start with the amount of equity they take. From his perspective, early stage startups are often giving too much of their company away for small investments and a short period of mentorship.

Additionally, Lynch believes that the quality of mentors that are connecting with companies through accelerators, like Techstars, are doing more harm than good. While that may be overstating it, he might be on to something.

With so many incubators and accelerators appearing on the scene, the quality of mentors to choose from is diluted. As such, some so-called “mentors” may not be the right people to be advising early stage startups. The problem is, many of the companies receiving mentorship may not be aware that they could be receiving bad advice.

While Techstars, of all the accelerators, most likely doesn’t have weak mentors coming through its doors, there are murmurs that the quality of mentorship has decreased of late. (No one was willing to go on the record to give more details.)

As far as the Social Network phenomenon that Lynch spoke about at TiE Boston, it’s a problem of overhype, “like any market phenomenon.”

“The Techstars startups are like boy bands,” he said. “Everyone wants to get involved with boy bands, so that now you have 32-year-old country singers who are reinventing themselves as boy bands, looking for one hit.”

“I don’t care if there is a 32-year-old in a boy band that he built and went through the shit to make it big,” he said. “What I don’t like is someone is jumping on the next trend just because its cool.”

“It creates bad art, bad music, bad business.”

Lynch’s points are valid in terms of what is happening in the startup scene these days, and, even Techstars isn’t immune from some of the hype machine stuff. On the whole, there are plenty of other bad players who are more dangerous to naive entrepreneurs than Techstars Boston.

Techstars Boston Track Record

While he may be spot on about the negative affect accelerators can have, Lynch’s opinions on Boston’s Techstars program may be somewhat off-base.

In a climate where incubators and accelerators are showing up on almost every street corner, in every niche business sector imaginable, one of the most successful accelerators in the country may not be the biggest threat to inexperienced entrepreneurs.

There are more incubator and accelerators in Boston these days than you’d believe. Most of them are exceptional and play a key role helping their cohort companies grow; however, like anything, there are some questionable operations on the market recruiting startups and taking advantage of naiveté.

Techstars Boston is not one of them.

While one could argue that the amount of companies coming out of Techstars and getting Series A and Series B is small, you could also make the point that not many companies make it that far to begin with. (There are 292 companies that have gone through Techstars; looking through CruncBase, 51 have received Series A, nine have had Series B rounds of funding, and two have had Series C.)

Compared to other Techstars programs throughout the country, Boston’s Techstars has an unparalleled track record.

While the first two Boston Techstars classes have a lot of failed startups, the two big successes, Localytics and StarStreet, are still very active in the Boston tech scene.

The third class is stellar. Startups from that cohort include GrabCAD, Help Scout, Promoboxx, Ginger.io, The Tap Lab, Kinvey, Evertrue, and Placester. The group has not only raised more than $50 million combined, but they are all innovating like mad in their respective sectors.

Since then, Techstars has helped CoachUp, Fancred, PillPack, Jebbit, and Freight Farms, companies that are gaining tons of momentum, raising funds, and generating plenty of buzz.

While it’s probably true, as Chris Lynch said, that most of the companies would have been successful on their own, the opportunity to accelerate growth has helped most of the good Techstars companies become great.

“We got a lot out of it. One of the reasons is that we were first time entrepreneurs,” said Raj Aggarwal from Localytics, which is one of the most successful Techstars companies in terms of total amount of funding.

“Everything we got out of Techstars, we could have probably gotten in other ways,” he added, “but it would have taken a lot more work and time, and when you are starting a company, time is a precious commodity.”

“It directly helped us raise our seed round, which, sure, we could have raised on our own,” Aggarwal said. “But the investors came to us because there is a selection process for Techstars it made us a safer bet for investors because there is some level of vetting and training thats already gone on.”

“All that stuff we could have done on our own, but we didn’t have to and it saved us time and money.”

Aggarwal, who had earned an MBA and worked for five years as a manager/consultant before starting Localytics, said Techstars helped his navigate the unique aspects of startup life while staying focused on what matter.

“It accelerated our ability to get where we needed so that we could spend our precious time on others things, like product,” he said.

So why is Boston’s Techstars so successful?

Almost to a person, anyone involved in Techstars — founders, mentors, advisors, and investors — raves about the program’s leadership. Other than being associated with the nationally recognized Techstars brand, Katie Rae, Reed Sturtevant, and former Brightcove co-founder Bob Mason may also be the reason that so many “on-the-cusp-of-making-it-big” companies decide to apply for Techstars.

As Rae, Sturtevant, and Mason move on to their next big thing, an early stage investment house called Project 11, Techstars Boston could be in trouble without its main draw of an outstanding leadership team.

As Fancred’s Kash Razzaghi said, “I’m the biggest fan ever of the people running the accelerators here, but if they fell off the face of the planet tomorrow, would I still be a huge Techstars advocate? I don’t know, I’d have to see who’s running it.”

Can Both Be Right?

For some companies, working closely with an early stage investor who, like Chris Lynch, can pass on his experience and wealth of knowledge building companies, can be vital to success. Some startups have great ideas and good teams but need a steady hand to guide them for the long term to achieve success.

At the same time, many other companies are just missing one or two components, like marketing, business acumen, etc., which can be gained in a short period of time by going through a respectable accelerator like Techstars Boston.

I doubt both sides will ever agree which process is most successful.

For Lynch, spending only a few months mentoring or advising someone isn’t enough time. He’s adamant on the point.

“They are trivializing being an entrepreneur,” he said. “[The accelerators] are doing it for their personal gain, and they are buying lottery tickets. You buy lottery tickets and all the suckers who can’t afford to even buy lottery tickets are subsidizing the winners.”

Lynch’s Atlas colleague Fred Destin agrees  in regard to some of the bad actors trying to take advantage of entrepreneurs. As he said, “There are too many people offering venture services who shouldn’t be doing that.”

However, Destin is a big fan of Techstars Boston. (Atlas, in case you were wondering, has many former Techstars companies in its portfolio, including a few that Lynch works closely with.)

As Destin said of the Techstars program, “It works variably for different companies, but for some, its completely transformational.”

Reed Sturtevant who helps run Techstars Boston along with Katie Rae and Bob Mason, echoed Destin’s view.

“The startups that get the most out of Techstars,” he said, “are the ones that come in with something to work with. They have a product, they have a team, and they really want to push it to the next level.”

“That’s who does well at Techstars.”

Sravish Sridhar of Kinvey might have the best perspective on the matter. Chris Lynch was an early backer of Kinvey and the company is part of the stellar 2013 Techstars Boston class.

“It really comes down to how a startup leverages the talent, experience, and the network their investors and the mentors in an accelerator have,” Sridhar said. “Most startups don’t use the help, influence, and reach their investors or an accelerator can provide for them.”

What Sridhar said was also similar to what both Aggarwal and Fancred’s Razzaghi said of Techstars. The companies that do well are not only prepared to leverage Techstars, but don’t expect Techstars to make them into a successful company. The same can also be said of the relationship between many VC’s and startups.

Sridhar might have summed it up best.

“It’s one thing to say that you are ‘venture-backed’ or even ‘mentor-backed’, but for it to be truly valuable for your company, you have to put in the work to engage your investors and mentors in meaningful ways.”

**UPDATE**

In response to this piece, Chris Lynch says that the conclusion that Techstars is successful is wrong. “The article never defines success or what counts to make a company cool,” he said. “It’s not dollars raised but dollars returned, and only Y-Combinator can tout that.”

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