He sold his last startup for $1.4 billion. Now he’s running a tech accelerator in San Diego

There’s a new startup accelerator in San Diego that’s been operating quietly through the pandemic, launched by a tech executive who recently achieved the entrepreneurial dream: a billion-dollar exit.

The new accelerator, called LogicBoost Labs, was founded by software executive Jonathan Cogley, the founder and longtime CEO of a Washington D.C. cybersecurity company called Thycotic.

When he started Thycotic, it was just a consulting firm back in 1996. Cogley opened a tiny office above a sushi restaurant in D.C., taping a paper sign to the door with the word “Thycotic” scribbled on it.

That startup evolved from a consulting shop to a cybersecurity company that was an early player in password management for enterprise customers. Thycotic just sold to TPG Capital for $1.4 billion in March.

“I never dreamed it would be worth a billion dollars,” Cogley said. “It’s really hard to imagine.”

Cogley grew the company to about 50 employees and $10 million in annual revenue on his own. Then in 2015, he raised money from investors to help scale the business, handed over the leadership reins and moved to the company’s board.

Toward the end of his tenure at Thycotic, Cogley moved from D.C. to San Diego, chasing the outdoor lifestyle.

“I thought, ‘Why am I in downtown Washington D.C. when I could be anywhere?’” Cogley said. “San Diego seemed to be the best place to go, so here I am.”

Now, Cogley lives in Ocean Beach and is running LogicBoost Labs, which he created in 2019, from his home. The accelerator invests in and helps grow software startups. He says the accelerator writes checks between $150,000 and $300,000 for its portfolio startups, then helps the companies grow from zero revenue to something worthwhile. The goal of LogicBoost is to get its portfolio companies to $1 million in annual recurring revenue.

One thing unique about LogicBoost is it employs in-house staffers in sales, marketing, customer success, and engineering. These LogicBoost employees can be used by the startups so they don’t have to hire any themselves.

“(As an angel investor), I quickly realized startups don’t just need guidance, mentoring and money,” Cogley said. “They needed the right people. The right expertise in sales, for example. This is so critical to your success. And startups can’t hire the right people because they’re so small and they have no revenue.”

For an accelerator, LogicBoost takes a fairly big ownership stake in its portfolio companies, asking for 20 percent with its first investment. Most accelerators take far less, with well-known ones like Y Combinator taking 7 percent with a $125,000 investment.

Brad Chisum, the former Googler who founded San Diego’s startup studio Launch Factory in 2019, said when accelerators do a lot of heavy lifting in management, company creation and staffing, a higher equity stake can be warranted. When Launch Factory invests $300,000 in a startup idea, it typically takes a full third of the ownership stake (although it’s not an apples-to-apples comparison, considering Launch Factory’s business model).

“There’s not a lot of studios yet that really roll up their sleeves and get involved,” Chisum said. “(For LogicBoost’s startups), maybe that’s worth 20 percent?”

But sometimes it’s not. Some accelerators overvalue their contributions to a startup, and each entrepreneur needs to vet whether an accelerator will be a net benefit for the company, said Mike Krenn, the CEO of San Diego’s startup nonprofit Connect. Still, he said it’s nice to see a new accelerator with leadership from the East Coast.

“His network is going to be totally different than mine and a lot of other San Diego accelerators,” Krenn said.

The accelerator invested in three companies since its launch and is currently accepting applications for its next cohort. Cogley said he’s looking for business-to-business, software-as-a-service companies that are still pre-revenue or early revenue. Candidates can apply on the LogicBoost Labs website.