-v2.webp)
Early-stage investing is often described as both an art and a science. When it comes to the accelerators and incubators run by venture capital funds like Techstars, identifying promising founders early on is critical. But compared to late-stage investing where company performance and valuation tell their own story, tracking signals for early-stage investing can prove elusive.
We recently sat down with Keith Camhi, Managing Director at Techstars, who runs the Techstars Economic Mobility Program. The program focuses on technologies that help raise living standards for low and moderate income Americans in areas including education, healthcare and benefits access, and legal.
With Camhi, we unpacked the strategies his team uses to successfully identify and nurture startups at the earliest stages of their growth journeys. Watch the full conversation or keep reading to learn about building a world-class accelerator program, marked with timestamps so you can dive deeper at key moments.
Key takeaways
- Camhi recommends prioritizing the founding team, with particular emphasis on seeking entrepreneurs who deeply understand and are passionate about solving specific problems rather than being attached to particular solutions.
- Successful startup sourcing combines both network-based referrals and broad marketing outreach, with about 50% of founders on Camhi’s program coming through trusted network referrals. Maintaining a wide funnel is important for discovering unexpected talent.
- While AI and automation play an increasing role in venture capital, particularly in research and workflow automation, human judgment remains crucial for final investment decisions.
- Early-stage investing remains relatively stable compared to later funding stages, with Techstars maintaining consistent deal volume through market cycles by focusing on strong founder selection, systematic processes, and long-term relationship building.
What early-stage investors look for
Camhi describes his top three selection criteria in simple terms: “Team, team, team.” While significant market size, measurable traction, and innovative solutions matter, it's the founding team that should take precedence early on. But what makes a team stand out? According to Camhi, it's not just about impressive resumes—it's about entrepreneurs having what he calls “founder-problem fit.”
“We look for founders who are angry that this problem exists and will run through walls to solve it,” Camhi explains. This sentiment is echoed by Ray Zhou, Co-Founder at Affinity. He advises founders to first be consumed by the problem they’re trying to solve, rather than getting attached to solutions. Zhou says, “Founders need to prioritize thinking about the market fit and the problem they’re solving, not the product or solution. Many of us are guilty of holding too tightly to solutions when the problem and the market are the real opportunities.”
Having a deep understanding of the problem—combined with the passion to solve it—often proves more valuable in early-stage investing than having the perfect solution or business plan right out of the gate.
Sourcing early-stage startups
When sourcing investment opportunities, Camhi takes what he calls the “ground game and air game” approach. The ground game relates to network-based referrals, which account for approximately 50% of the companies that end up being selected for the accelerator program. These leads, while fewer in number, tend to be higher-quality and better aligned with the program’s requirements.
The air game casts a wider net. This is typically done via global marketing, using the Techstars brand across LinkedIn, digital outreach, and press campaigns to raise awareness about the program.
The air game, with its top of funnel approach, generates higher volume but the conversion rate is lower. The key is to maintain both strategies simultaneously—great entrepreneurs can come from both sources, and a strong air game helps ensure no one falls through the cracks, while the ground game allows the firm to rely heavily on the power of trusted networks.
{{guide-202310="/rt-components"}}
Creating a referral flywheel for early-stage companies
Unlike traditional VC funds, Camhi’s accelerator program operates in distinct phases: sourcing, selection, and support, with ongoing portfolio management throughout the year. This structured approach allows for intense focus during each phase, particularly during the crucial three months of the actual accelerator program.
“Great mentorship at the right moment can save a startup years of learning things the hard way,” Camhi notes, sharing how his own experience as a founder taught him the value of timely guidance.
Sourcing startups that are a good fit for the program and then supporting their growth potential ultimately creates value for the firm longer-term. As Camhi puts it, “when we do a great job, they become a referral source too.” This builds a flywheel for future cohorts, further strengthening the ground game component of the firm’s sourcing strategy.
Balancing new technologies with venture capitalist decision-making
While VC firms across the board are increasing their use of AI and automation, how they employ the technology is shifting.
As noted in our 2025 predictions report, there has been a substantial decrease in the number of dealmakers using AI for investment decisions: 13% of respondents reported using AI for this purpose in the most recent survey, down from 40% the previous year. In contrast, 76% of respondents reported using AI to automate daily tasks and 64% for researching companies—up from 62% and 55%, respectively, last year.
Camhi’s team has found their own version of this balance. While they don't rely on AI for final investment decisions, they do use it strategically to:
- Score applications using supplementary data
- Prevent promising candidates from being missed (for example, if a team member passed on an application but the accompanying AI review is high, it will be revisited)
- Automate workflow and documentation
- Facilitate inter-program information sharing
For example, the team uses Affinity to manage its vast global network. The platform provides visibility into the firm’s collective network—and accurate insights into who knows whom—so that Managing Directors can act as nodes of expertise in specific geographic and industry sectors, with their information easily surfaced by anyone looking for answers to specific questions, or for a warm introduction. Here the technology supports, rather than replaces, human decision-making.
Red flags when looking for early-stage funding
Startup investing is inherently high risk, particularly at the pre-seed, seed, and Series A rounds. In Camhi’s experience having evaluated thousands of opportunities, there are specific red flags that result in an immediate no from his team:
- Lack of program research: A large percentage of applicants are passed on before the interview stage, with a lack of program research as a leading cause. Camhi stresses the importance of due diligence—doing the homework before submitting a targeted application.
- Bad behavior in interviews: Arrogance can quickly be picked up at the interview stage, and lead to a swift rejection. This includes poor listening skills and anything that could be perceived as lying, particularly when it’s information that is quick for the investment team to verify.
- Inability to work well in group settings: An effective accelerator class becomes self-supporting, so group dynamics matter. If founders can’t perform well in a group setting, they might be suited to other types of angel investing or seed funding, but not an accelerator.
Conversely, successful accelerator candidates typically demonstrate thorough research, genuine interest, and strong collaborative potential.
Investing consistently for the long haul
While many areas of private equity have experienced volatility over the past few years, Techstars has been able to maintain consistent deal volume regardless of market conditions. Camhi views the pre-seed stage as relatively stable compared to later stages. He says, “the closer you get to the exit stages and initial public offering (IPO), there’s more volatility. You'll see that’s driven by the state of the public markets and the M&A market whereas pre-seed stays relatively more stable, and we're able to stay more stable as a result."
Camhi emphasizes that “great companies can be formed in both headwinds and tailwinds” and this steady approach, combined with portfolio diversification, has proven successful for the firm through various market cycles.
Perhaps most importantly, the firm’s approach extends well beyond the initial investment. Through an ecosystem of industry expertise, ongoing support, and a strong alumni community, they create lasting value for portfolio companies as they navigate future funding rounds.
A blueprint for early-stage venture capital
Camhi’s and his team’s success combines systematic processes with a strong emphasis on human decision-making and long-term relationship building. Camhi describes his approach to dealmaking as three legs of a stool: “It's great sourcing, great selection, and then great support of the companies.” Effective founder mentorship can significantly impact investment outcomes, which then contribute to a stronger network for the firm to source from in the future.
Watch the full webinar to get deeper insights from Camhi. Or for more information on optimizing your investment workflows and managing relationships at scale, explore how Affinity can support your firm.
.webp)
.webp)
.webp)