In a recent Zoom meeting, Techstars CEO Maëlle Gavet discussed the organization’s $80 million Advancing Cities Fund, raised through J.P. Morgan’s Private Bank Platform. The meeting highlighted challenges and tensions within the program.
Amid assembling cohorts and deploying funds since 2022, Techstars aimed to support over 400 companies founded by underrepresented individuals. The initiative led to the establishment of Techstars programs in multiple cities, including Oakland, Atlanta, and Miami.
However, by August 2023, concerns had arisen as J.P. Morgan’s team seemed disengaged from the partnership. Gavet acknowledged that missteps from both Techstars and the bank had strained the relationship.
While Techstars has invested a significant portion of the fund, uncertainty looms over the potential renewal of the partnership for an Advancing Cities 2 Fund after the initial contract expires in December.
The fate of the Advancing Cities programs, along with the individuals involved, remains uncertain, with J.P. Morgan and Techstars refraining from commenting on the future of the collaboration.
A Complex Relationship:
Techstars is undergoing operational restructuring, including program cuts and staff layoffs, despite missing revenue projections in 2023. The organization faces challenges as it strives to support founders from underrepresented communities.
An internal meeting in August revealed a series of incidents within the Advancing Cities Fund deployment, such as complaints about program directors and event issues, causing concern for J.P. Morgan. The bank’s expectations regarding diversity goals did not align with Techstars’ broader definition of diversity.
The differing viewpoints on diversity metrics led to friction in the partnership, with J.P. Morgan emphasizing specific diversity criteria while Techstars adopted a more inclusive approach. This discrepancy impacted program outcomes and strained the relationship further.
Challenges and Complications:
Managing directors faced conflicting priorities, balancing diversity targets set by J.P. Morgan with the need to secure returns for the program. Staff turnover in leadership roles added to the challenges, leading to uncertainties about the future of the partnership.
As the contract renewal deadline approaches, Techstars navigates a complex situation, with leadership warning staff about potential outcomes if the partnership with J.P. Morgan does not continue.
The success of the Advancing Cities program remains crucial, with implications for both Techstars and the diverse founders it aims to support.
If you have insights or information related to this story, please reach out to Dominic-Madori Davis at dominic.davis@techcrunch.com or Mary Ann Azevedo at maryann@techcrunch.com.
