Detroit startup incubator closes operations
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January 30, 2020 01:59 PM

Detroit startup incubator closes operations

Alexa St. John
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    DETROIT — Startup accelerator Techstars Detroit, backed by several major automotive companies over the past five years, is closing its incubator program here. 

    Techstars Detroit Managing Director Ted Serbinski said in an email to supporters that lack of funding for 2020 was the primary reason for the shutdown. Serbinski will continue working at Techstars in some capacity while it maintains a limited Detroit presence.

    "With sadness, I must share that the Techstars Detroit Accelerator is officially shutting down," Serbinski's email said. 

    "We did not secure enough funding for 2020. It's clear the entire automotive mobility industry is tightening as sales slump and we hit the trough of disillusionment with autonomy. Techstars is focused on running profitable programs -- running at a loss doesn't work, especially for growing startup like Techstars."

    The program will be shut down as a result of major headwinds facing the industries that Techstars targeted, Serbinski told Automotive News Thursday. 

    “Over the last five years, the Detroit program continued to evolve with the industry changes. What we saw this year, was a lot of things coming full circle around strategies evolving and other things in the industry,” Serbinski said. “A lot of these OEMs and suppliers are like, okay, we can work with [startups], but can we make money doing these new types of mobility?” 

    Serbinski said the mobility industry has faced a decline as autonomy seems further away than it did five years ago when the accelerator program began, while at the same time, many in the industry are attempting to compete with Tesla, Uber and Lyft. 

    The program began as Techstars Mobility, a business incubator focused on supporting startups through its mentorship-driven accelerator program.

    Each year, Techstars named a class of innovators to develop their fledgling companies in Detroit — where much innovation is taking place, especially in close proximity to major automakers, suppliers and venture capitalists.

    “I think the Uber IPO was probably the final straw that broke the camel’s back,” Serbinski said. “The startup ecosystem is stronger than ever. The challenge is the corporations still don’t really know how to tap into that in a longterm, viable way.” 

    Modified roles

    Serbinski said he will continue working at Techstars to develop a new program in Detroit, but did not have additional details at this time. Serbinski also said Techstars Detroit’s corporate partners will continue to play a modified role in supporting the program’s existing startups. 

    Automotive companies, notably Ford Motor Co., Honda Motor Co. and Lear Corp., among others, supported the program since its inception in 2015. The program has funded and supported 54 startups from across the globe. 

    The program rebranded as Techstars Detroit Accelerator last year to focus more on the expanding mobility landscape and home in on industries that would "benefit from the unique advantages of being in the Detroit ecosystem," Serbinski said in a blog post.

    In a separate post, Serbinski said Techstars' selections for the class of 2019 were indicative of the program's increasingly focused investments in "startups transforming the intersection of the physical and digital worlds."

    Those startups included Alpha Drive, of New York, a platform-as-a-service company for testing and validating autonomous systems; smart shuttle startup Teporto, of Tel Aviv, Israel; and Airspace Link, of Detroit, a company focused on safer drone operations.

    Their efforts throughout the year culminated in a single-day event coined Demo Day, during which the startups showcased their technologies to industry leaders and mobility investors.

    Suburban Detroit seating supplier Lear supported the program through Lear Innovation Ventures — the company's approach to investing in advanced development teams, partnerships and early-stage technologies, led by Chief Technology Officer John Absmeier. As a corporate partner, Lear provided its Innovation Center in downtown Detroit to Techstars.

    Ford's collaboration with the program also included mentorship and support of the budding entrepreneurs.

    Ford did not immediately respond to Automotive News requests for comment.

    "Techstars Detroit is one of several early stage technology partnerships for Lear Innovation Ventures, and we look forward to staying engaged with the Techstars organization worldwide," Lear said in an emailed statement. "We remain fully committed to accelerating the pace of innovation and collaboration through our investments in global venture capital funds and innovation platforms, as well as supporting the vibrant entrepreneurial network in Detroit."

    TechCrunch first reported the story Thursday morning. 

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