Newchip, an online accelerator that made promises to support startups, has recently filed for bankruptcy and is now grappling with insolvency while facing dissatisfaction from both employees and clients. On May 4, numerous employees staged a walkout, demanding the resignation of founder Andrew Ryan as CEO.
According to Ryan’s LinkedIn profile, he started Newchip in 2016 after serving as a city commissioner in Austin. Initially functioning as an aggregator of top deals from crowdfunding platforms, Newchip transitioned into its current accelerator model. Ryan describes Newchip as an entity providing entrepreneurs with the necessary skills, tools, and funding opportunities to build and scale their startups from launch to exit through its online global accelerator and venture fund.
However, some employees claim that Newchip failed to deliver on its promises and left founders who had signed up feeling abandoned. Complaints included the high fees, ranging from a few thousand dollars to as much as $18,000 or $20,000, with founders finding it difficult to obtain refunds when the accelerator did not fulfill its obligations.
Mismanagement was a significant concern raised by former employees who walked out and spoke with TechCrunch. They alleged that Ryan displayed aggression towards individuals within the company through written and verbal communication, and made poor decisions regarding leadership roles. One anonymous employee reported instances of Ryan being degrading and demeaning towards staff members.
In response to allegations of demeaning behavior, Ryan acknowledged that his leadership style was influenced by a “military mindset” and admitted that there were instances where the line between accountability and conflict became blurred. He also mentioned that he could see how his reactions might have been perceived as demeaning, while emphasizing the importance of preparedness and occasionally ending meetings without agendas.
Ryan claimed that the recent walkout by employees was prompted by their dissatisfaction with impending layoffs and was led by a Newchip investor. While he didn’t reveal the investor’s identity, it is believed to be Joe Merrill, who also held the position of Newchip’s board chief.
Numerous founders also expressed dissatisfaction with Newchip. They reported being misled by the accelerator’s salespeople, who promised access to a vast network of investors but failed to deliver on introductions. Requests for refunds were denied, with founders feeling that Newchip prioritized profits over providing services. The terms and stipulations for refunds were allegedly designed to prevent reimbursements.
Former employees stated that Newchip rarely issued refunds and even paid customers to remove negative reviews. Ryan disputed these claims, stating that refunds were not given in cases where companies folded, as outlined in the customer contracts. He acknowledged the practice of customers using negative reviews as leverage to demand refunds but stated that significant refunds were issued each month.
Claims of mismanagement within Newchip extended beyond recent events. Employees alleged that sales commissions were clawed back, and Ryan awarded himself bonuses during monthly financial deficits. Ryan confirmed that unsigned contracts resulted in the removal of sales commissions, as some team members were found to have charged accounts despite contracts not being signed.
The future of the entrepreneurs enrolled in Newchip’s program, as well as the remaining employees and the company itself, remained uncertain. Former employees have expressed their intention to seek assistance from other accelerators and the startup ecosystem in order to support founders who have been affected. Ryan stated that he was seeking external support to sustain the company and continue its programs.