Techstars, a renowned accelerator program for startups, has faced significant challenges and internal turmoil under the leadership of CEO Mäelle Gavet. The problems began when Gavet took over from co-founder David Brown in January 2021. At the time, Techstars was struggling to define its future strategy and lacked concrete plans for expansion. Gavet, despite lacking startup and venture capital experience, had ambitious goals for the company, including investing in 5,000 companies per year.
However, as the industry faced economic downturn and increased competition, Techstars’ financials began to suffer. The company posted a $7.2 million loss in operations in 2021. In response, Gavet implemented a cost-cutting strategy that led to layoffs and the closure of several programs. This resulted in an exodus of senior leadership and corporate sponsors.
Gavet’s leadership style and decision-making also caused friction within the organization. Employees described a toxic work culture characterized by gaslighting, threats, and dysfunction. Many employees, particularly women and people of color, felt that their concerns were not addressed and that diversity of thought was not encouraged.
The conflict between Gavet and managing directors, who were previously autonomous in running their programs, escalated to a “cold war” situation. Managing directors feared that any misstep could result in their termination and the loss of their carried interest. One notable incident occurred with Alfredo Jollon, the managing director of Techstars Stockholm. Jollon was fired after a disagreement with Gavet over a social media post expressing support for a bank that was collapsing. The program was initially shut down but reinstated after protests from founders.
Techstars’ relationship with corporate partners also deteriorated during this period. Partnerships with organizations like Northeastern University’s Roux Institute and Pivotal Ventures were not renewed. The company faced financial challenges with its J.P. Morgan partnership and had to lay off employees to save costs.
The turnover rate at Techstars increased significantly, with many managing directors leaving the company. Gavet introduced a new organizational structure called Techstars 2.0, which centralized decision-making and reduced the autonomy of managing directors. The company also focused on fewer programs in select cities and aimed to hit billions of assets under management.
Despite the internal turmoil, Techstars managed to raise a new fund of at least $50 million, providing some hope for the future. However, uncertainty remains as to whether more cuts will be made and what the company’s ultimate fate will be. Speculation abounds about a potential public offering or sale.
In conclusion, Techstars’ struggles under Mäelle Gavet’s leadership highlight the challenges faced by organizations trying to navigate a rapidly changing industry. The company’s response to financial difficulties and its approach to cost-cutting have created a toxic work culture and strained relationships with partners. The future of Techstars remains uncertain as it seeks to regain stability and redefine its role in the startup ecosystem.