Techstars, the startup accelerator, has announced that it will be laying off 17% of its workforce. This decision comes as the company plans to end its $80 million J.P. Morgan-backed AdvancingCities program at the end of this year. The program was launched in 2022 with the goal of supporting more diverse founders in cities across the nation.
The relationship between Techstars and J.P. Morgan had soured early on, as the bank did not commit to continuing the program by the expected deadline. As a result, Techstars was unable to start fundraising for another round and deploy capital from the second round in 2025. The fate of around 20 Techstars employees who worked on the program was uncertain. However, it has now been confirmed that the program will be officially shut down.
J.P. Morgan, in a statement, expressed its commitment to supporting entrepreneurship across the country through other means, such as expanding its diverse manager network and private investments platform. The bank’s spokesperson emphasized that the AdvancingCities fund will be fully deployed by the end of this year as planned.
The layoffs at Techstars were announced by CEO David Cohen in an email to staff. He acknowledged that the company had overbuilt and over-hired, leading to the need for downsizing. Most of the layoffs will come from engineering, support services, sales, and partnerships. However, Cohen assured that the majority of accelerator programs will not be impacted, except for the J.P. Morgan programs.
This news comes during a transformative year for Techstars, as the company underwent a change in leadership when former CEO Maëlle Gavet stepped down in May. Cohen took over the role again, and the layoff announcement follows a 7% reduction in headcount earlier this year.
Under Gavet’s leadership, Techstars had focused on scaling and supporting more startups, but the strategy faced criticism from the investment community. Cohen addressed these concerns in his email to staff, stating that the company will now prioritize being better for founders every day rather than solely focusing on scaling.
Techstars declined to provide further comment but directed attention to Cohen’s email, which is published on its website.
Overall, this news highlights the challenges that can arise in partnerships between startups and large financial institutions. It also underscores the need for organizations like Techstars to adapt their strategies to better serve the needs of founders and address the concerns of the investment community.