The inside story of DreamIt Ventures’ first New York City accelerator

“Have you ever had a failed startup?” I asked Mark Wachen, the managing director of DreamIt Ventures’ New York accelerator program.

He laughs, “Well, in the mid 1990s, I had what one might call a start-down.” It was between graduating from Harvard Business School, helping to launch the original Sony Music website, running music promotions with Yahoo, leaving Sony and then returning to Sony that Wachen tried to launch his own company. He became distracted by the freneticism of the time, and people around him who said “I don’t like your idea, but hey there’s this other opportunity…” Shortly after, Sony recruited him back to start a corporate venture group, which Wachen cites as a great learning experience for his current role leading fresh young startups into the world.

He left Sony for the 2nd time in 2001 and started Optimost, which performed multi-variate testing, assessing copy and layout on a website to maximize conversion. He kept the company lean from the start and made a huge exit selling Optimost to Interwoven in 2007 for $52 million. Wachen, a born and bred New Yorker, then decided to try his hand at becoming an early stage angel investor and founded Upstage Ventures.

He first invested in SeetGeek, a secondary ticket market startup, a perfect trifecta of sports, concerts and analytics that immediately attracted Wachen. SeetGeek’s founders had recently graduated from DreamIt Ventures 2009 accelerator program in Philadelphia, PA and spoke very highly of the experience. In a vibe similar to Y Combinator and Tech Stars, the DreamIt founders designed the accelerator to help talented teams with funding, development, mentoring and the opportunity to pitch to angel investors and venture capitalists. DreamIt offers each selected company a “Dollarship” of between $10,000 and $25,000, and $5,000 plus $5,000 for each founding team member (up to four) who will be onsite for the program. In return, DreamIt will receive a 6% passive equity stake in the company.

Wachen became intrigued. He met with DreamIt Ventures founders David Bookspan, Steven D. Welch, Michael Levinson and then Kerry Rupp, a Managing Partner.

How did you know Mark was the one?” I asked Kerry Rupp.

“We wanted someone with successful startup experience and an exit. Someone with a credible name in the New York scene, someone connected to investors in the early stage space,” says Rupp.

Wachen met Rupp on a rainy day at the Javitz center at an AdTech event. “I was soaking wet when I first met him,” Rupp recalls.

“I impressed her with Sbarro’s pizza from the food court,” Wachen adds.

Rupp says DreamIt was already planning an expansion to New York City after noting that 12 of DreamIt’s 36 alumni companies were based there. “Our alumni came to us and said New York needs you. You could provide a lot of value here. But the clincher was that they said, ‘And we’ll help you,’” explains Rupp.

They spent the fall looking for office space, officially brought Wachen on board in November, and opened up applications soon after. They received over 500 applications including more than 35 Groupon clones, 25 attempts at fixing the “Reply All” group planning process and multiple submissions from Eastern Europe.

For this particular class, DreamIt partnered with Startl, a company that focuses on “identifying talent and advancing products for the future of learning.” 1/3 of the incoming class was picked for its focus on the education space.

Traditions throughout the program included a regular speaker scheduled every Tuesday, workshops every Thursday, ultimate frisbee game on Sunday in Central Park and weekly “Fishbowls” when all the teams got together to listen to one company present their issues and elicit feedback. The office was never empty. In fact, Wachen ended up buying a futon for the office because so many people were pulling all nighters and taking naps whenever they could.  Every day Wachen would take a picture of who was sleeping on the couch/table/etc.

How does DreamIt stack up against other New York City accelerators like TechStars, ERA and Gramercy Labs Collective?

“To some extent, the market is big enough to bear all of us,” says Rupp. “We differentiate ourselves in the approach we take to mentorships: we source mentorship after we have the companies to create specific team dynamics. We also ask for an intensive time commitment of 3 to 5 hours a week. We want our mentors to dig in and get under the hood, to challenge the companies to get out of their comfort zone.” DreamIt Mentors come in two forms: One half are seasoned entrepreneurs, while the other half are CEOs of early stage startups– the “young gun advisors”– if you will.

Would you consider putting the program on reality TV? (Like, TechStars has done.)

“I don’t think so. There are challenges being able to give frank, honest advice in that setting. People always act differently on camera. What’s really important at the end of the day is that we’re giving these companies the best advice and experience possible,” says Rupp.

What’s so great about living in New York City right now?

“I get asked a lot, ‘Is this a bubble?’ Ha, If you didn’t live through the late 90s, you haven’t seen a bubble. New York didn’t have the infrastructure it has now; the early stage capital, the coworking spaces, and the center of gravity that is now Union Square and the Flatiron…It reminds me of the era when Hendrix and Dylan would hang out in New York,” says Wachen.

The 15 DreamIt teams featured below will share an office for one more week. DreamIt Ventures will continue to maintain an advisor relationship with each of the teams. Read on for stories from the teams’ experience with DreamIt and of course Demo Day, when the teams pitched to a room filled with investors, mentors, press and New York’s startup community in midtown’s McGraw Hill Conference Center.