Techstars, a prominent startup accelerator with nearly two decades of history, is updating its investment terms. Starting with its Fall 2025 batch, Techstars will now invest $220,000 in each participating startup—an increase of $100,000 from its previous model.
The funding will come in two parts:
- $20,000 for 5% equity, consistent with its long-standing approach.
- $200,000 via an uncapped SAFE note that includes a most favored nation (MFN) clause.
The MFN clause means Techstars will get the most favorable deal terms the startup offers future investors. The actual equity percentage from the $200,000 SAFE depends on the valuation of the startup’s next financing round. For instance, if a company raises at a $10 million valuation, Techstars would receive 2% equity through the SAFE—bringing its total stake to 7%.
How Techstars Compares to Y Combinator
The updated terms now place Techstars more in line with Y Combinator (YC), which restructured its deal in 2022. YC offers:
- $125,000 for 7% equity
- An additional $375,000 SAFE on an uncapped note with an MFN clause.
In total, YC startups receive $500,000, more than double what Techstars now offers. However, that larger investment could mean more dilution for founders, depending on the SAFE’s future conversion rate.
So which accelerator gives founders a better deal? It comes down to capital needs and how much equity a startup is willing to give up. YC offers significantly more upfront cash, which may appeal to capital-intensive businesses. On the other hand, Techstars’ smaller SAFE investment could be more attractive to startups aiming to limit dilution in their early stages.
Both accelerators also bring extensive mentorship, community, and investor networks. Ultimately, the value each founder sees may depend as much on those intangible benefits as on the money.
