Techstars Lays Off 17% of Its Workforce, Ends J.P. Morgan Partnership [updated]

Techstars, a global startup accelerator that provides mentorship, funding, and a network of support to early-stage companies, has laid off 17% of its workforce, ending its $80 million J.P Morgan-backed AdvancingCities program by the end of 2024. The AdvaningCities initiative was launched in 2022, and was designed to support diverse founders in cities like Oakland, New York, Miami, and Washington D.C. 

In an email announced by Techstars Co-founder and CEO David Cohen, he disclosed that the startup accelerator “overbuilt and overhired”. The layoffs primarily affect teams in engineering, support services, and sales, with most of the company’s accelerator programs remaining unaffected except for those linked to J.P Morgan.

This recent layoff of workers follows a 7% reduction in headcount earlier in the year and is part of a broader shift in strategy under Cohen’s leadership, focusing less on scaling and more on improving support for founders.

It is worth noting that Techstars is currently undergoing an operational restructuring, which was publicly announced in February 2024, after it missed 2023 revenue projections and logged $7 million in losses, according to preliminary numbers seen by TechCrunch.

The primary focus of the restructuring is to position the startup accelerator for future growth and to better support its portfolio companies. Part of the restructuring includes cutting programs worldwide, laying off staff, and shuttering accelerators in cities like Oslo, Austin, and its former mothership, Boulder, Colorado.

In addition to the layoffs, Techstars is also restructuring its accelerator programs. Starting in 2024, the company will move to a two-term schedule, where most of its programs will start and end together twice a year. This change is intended to create better funding opportunities and a more concentrated Demo Day experience for participating startups, thereby increasing the success of its portfolio companies.

Key Points on Techstars Restructuring:

• Venture Capital Industry Challenges: The restructuring is being undertaken in response to broader challenges facing the venture capital industry.

• Focus on Core Strengths: Techstars is aiming to concentrate on its core strengths and areas of expertise.

Techstars restructuring process comes as the venture capital (VC) industry is undergoing a significant transformation driven by several factors, including market volatility, the rising cost of capital, and shifts in investment strategies.

With economic uncertainty and tighter financial conditions, many VC firms are becoming more selective in their investments, focusing on profitability and sustainable growth rather than rapid scaling. There has been a noticeable slowdown in funding rounds, with startups facing more scrutiny regarding their business models and paths to profitability.

Additionally, valuations have been adjusted downward, and there is an increased emphasis on due diligence. The restructuring also involves VCs diversifying their portfolios, and investing in sectors that are more resilient to economic downturns, such as climate tech, Al, and other emerging technologies.

This shift is also prompting changes in how VC firms operate internally, with some reducing their workforce or restructuring their teams to adapt to the new market dynamics. The overall goal of this restructuring is to ensure that VC firms can continue to generate returns for their investors in a more challenging economic environment.

Updated: We received this statement from a J.P. Morgan spokesperson:

In 2022, J.P. Morgan announced the $80MM Advancing Cities Fund, raised as a private placement to invest in a Techstars accelerator program focused on advancing equitable access to funding among diverse founders across the U.S. The fund is expected to be fully deployed by the end of this year, as planned. JPMorganChase remains committed to supporting founders across the country through the expansion of its diverse manager network, private investments platform and engagement capabilities.