Techstars launches defence and security startup accelerator in South Australia

Boulder, Colorado-headquartered startup accelerator Techstars has expanded into the Asia-Pacific region, with Adelaide chosen as its first launch location.

Similar to its accelerators in the US and UK, Techstars Adelaide will be a three-month mentorship-driven program with 10 participating startups receiving up to $120,000 each in exchange for 6 to 9 percent equity.

The accelerator is now on the hunt for early-stage startups in the Internet of Things (IoT), big data, sensors, and robotics fields with products that could potentially be applied in defence. Techstars Adelaide is also being supported by a number of large defence companies including BAE, Thales, Austal, SAAB, ASC, Rheinmetall, and DCNS.

Techstars co-founder and co-CEO David Cohen told ZDNet that innovations that are discovered and applied in defence -- such as GPS -- are often applicable more broadly.

"The defence department tends to be the first innovator," Cohen said. "If you look at the history of innovation, the innovations coming through the defence department have been some of the most important innovations ever. Little things like drones, sensors, and the Internet of Things are defence-type initiatives, but the big one is the internet itself. That was an initiative that was created by the defence industry and has really changed the world in so many more ways than just military applications."

Adelaide was chosen over other Australian cities for a number of reasons, one being that it's home to three defence industry precincts with more than AU$100 billion worth of defence industry projects in the pipeline. The federal government also recently invested AU$230 million into the Centre for Defence Industry Capability in South Australia.

Minister for Defence Industry Christopher Pyne welcomed the launch of Techstars Adelaide, saying that it supports the Turnbull government's commitment to the promotion and development of defence innovation in Australia.

"This is a welcome and encouraging step for new collaboration across defence industry," Pyne said. "The government is investing AU$640 million over the next decade to mature and further develop technologies in the engineering and development stages. Initiatives such as these ... will support the defence market to mature advanced technologies to a level that are ready for Defence consideration."

South Australia's Manufacturing and Innovation Minister Kyam Maher also welcomed the launch, saying it will provide an opportunity for local entrepreneurs to showcase their products globally and attract talent to the state.

Apart from its status as a defence hub, Cohen said there are similarities between Adelaide and Boulder, the city Techstars was founded in, that made the South Australian capital an attractive location.

"It just feels kind of like home. Boulder, where we started, is a town of 100,000 people and now it's the fifth largest venture capital community in the United States even though it's so small," Cohen said.

"We believe that startups can be built anywhere. [Adelaide] felt like the right place to start for us."

The exact location of the accelerator is yet to be confirmed, as are the mentors. However, Cohen said it would be a combination of mentors from Techstars' global network and from Techstars Adelaide's corporate partners.

Cohen said one of the unique elements of Techstars is its equity back guarantee. If startups are unsatisfied with the accelerator program, they are able to take back the equity provided -- or a portion of it -- by paying back the investment.

"If we don't deliver the value that you believe you're going to get, you can take equity back -- no questions asked. You just return the amount of capital. If you want half of it back, you would return half the capital. We ask for feedback in order to improve, but we don't challenge it," Cohen said, adding that about a handful out of 900 companies have ever taken advantage of this option.

In addition to providing capital, mentorship, and resources worth over $1 million, Cohen said the accelerator will make it easier for startups with global aspirations to enter markets such as the US, Europe, and Israel.

"Because of the global nature of our network, it'll create very strong ties to those in other locations we operate in," he said.

Cohen added that participating startups will have access to corporations and innovation executives, which can eventuate in partnerships or even acquisitions.

"We partner and run accelerators for lots of major corporations around the world like Barclays, Ford, Amazon, and many others. So we have very deep ties to all those big companies that can really help the startups there," Cohen said.

The program is slated to take place from July to September and an APAC managing director is currently being recruited.

Techstars alumni, which includes Sphero and SendGrid, have a combined market capitalisation of $7.5 billion; and more than 100 startups have been acquired since the accelerator's inception in 2006.

Techstars is not the only US startup-related initiative that has expanded into Australia. In December 2016, San Francisco-headquartered curated co-working community RocketSpace partnered with Australian real estate group Dexus Property to launch a network of campuses in Sydney, Melbourne, and Brisbane to provide startups with desk space as well as access to capital, hands-on workshops, peer group roundtables, networking events, and corporate partnerships.