Techstars plans to lay off 17% of its workforce and exit its $80 million JPMorgan-backed Advancing Cities program once it's fully funded at the end of the year, according to information obtained by TechCrunch.
The Advancing Cities program, launched in 2022, has launched accelerator programs across the country in cities such as Oakland, New York, Miami and Washington, D.C., with the aim of supporting more diverse founders.
JPMorgan sponsored the program until December, but as TechCrunch previously reported, the bank's relationship with Techstars quickly soured. The bank was supposed to commit to continuing the program last summer so Techstars could begin raising another round of capital with the hope of a second round of funding in 2025. But the bank did not commit by that deadline. At the time of previous reporting, the fate of about 20 Techstars employees who worked on the program was unknown.
“In 2022, JPMorgan announced the $80 million Advancing Cities Fund, raised through a private placement to invest in the Techstars Accelerator program, focused on driving equitable access to capital among diverse founders across the U.S.,” a JPMorgan spokesperson told TechCrunch. “The fund is expected to be fully deployed by the end of the year as planned. JPMorgan Chase remains committed to supporting companies across the U.S. through the expansion of its diverse manager network, private investment platform and engagement capabilities.”
News of the program's official closure was reported by The Information on Wednesday.
In an email about the layoffs, Techstars co-founder and CEO David Cohen told staff that startup accelerators are “overbuilt and overhired.” He said the majority of the layoffs will come from people working in engineering, support services, and sales and partnerships. He promised that most accelerator program operators will not be affected, with the exception of JPMorgan's programs, particularly the Advancing Cities program.
The news comes during a year of change for Techstars, as former CEO Mael Gavet stepped down in May and Cohen returned to the role. Wednesday's layoffs follow a 7% staff reduction in January, as previously reported by TechCrunch.
Techstars' strategy under Gabbett was to scale up to more programs and back more startups, but it drew criticism from some in the investment community as it began restructuring earlier this year. Cohen addressed some of the criticism in an email to staff today, saying the company would go “less focused on scale and more focused on becoming a better company for founders every day.”
Techstars declined to comment further but pointed to Cohen's email, which it published on its website.