Techstars, the renowned US-based accelerator with a global footprint and a strong presence in Africa, has officially revised its investment terms, aligning more closely with those offered by its primary rival, Y Combinator. The update reflects Techstars’ ambition to remain highly competitive in attracting top-tier early-stage startups from around the world, including a growing number of African ventures.
Founded in 2006, Techstars has established itself as one of the most influential accelerators in the startup ecosystem, having supported over 3,500 companies globally and invested in more than 100 startups across Africa. Its programmes span numerous global cities and sectors, offering mentorship, capital, and access to a vast network of investors, founders, and industry experts.
With the updated deal structure, Techstars will now offer selected startups a total of US$220,000 in funding—a significant increase from its previous standard of US$120,000. The new investment model will be divided into two distinct components:
- US$20,000 will be provided upfront in exchange for 5% equity in the startup.
- An additional US$200,000 will be offered through an uncapped SAFE (Simple Agreement for Future Equity) with a “Most Favoured Nation” (MFN) clause.
The MFN clause ensures that Techstars receives the same favourable terms as any subsequent investors, based on the startup’s next priced funding round. This structure provides founders with greater flexibility while giving Techstars access to the most advantageous conversion terms available in the future.
This strategic update mirrors the investment structure that Y Combinator (YC) introduced in 2022, which was seen as a game-changer in the accelerator space. YC’s offer—also US$500,000 split between a SAFE and a post-money valuation—set a new bar for accelerator funding. By aligning with similar terms, Techstars positions itself to continue competing effectively for high-potential startups, especially in emerging markets where early-stage capital remains scarce and highly sought-after.
The move also signals Techstars’ long-term confidence in the evolving startup ecosystems across Africa and other undercapitalized regions, where more founders are building globally competitive solutions and attracting international attention.
As accelerators become more aggressive in their funding terms and value propositions, Techstars’ latest update is likely to make its programmes even more attractive to early-stage startups looking for both capital and credibility.
