By Laura Rolek, Silicon Hills News Publisher and Senior Writer
NewChip entered bankruptcy proceedings last week.
The Austin-based company, which has rebranded itself as Astralabs and operates as Newchip and Newchip Accelerator, has total assets of $1.7 million and total liabilities of $4.8 million, according to filings, and closed March 17. filed for chapter 11 of the bankruptcy law on the same day. But last week, a bankruptcy judge forced the company into a Chapter 7 liquidation, according to a letter posted by co-founder and CEO Andrew Ryan.
“It is with great regret that we announce that our Newchip Accelerator, which has been supporting startups around the world for more than six years, has faced a series of unfortunate events that have had a significant impact on our business,” said the company’s former name. Ryan, aka Ryan Laforse, said.
The company has senior unsecured creditors including Apex Funding Source in Miami ($536,000 claim), Clear Finance Technology Corporation in Ontario, Canada ($1.5 million claim), and New Jersey’s It cites Dolphin Capital ($594,000 claim). These are all listed as “merchant cash advances,” an alternative loan for small businesses where the borrower prepays interest and the lender receives a portion of the company’s future earnings until repaid.
In addition, NewChip received more than $776,000 in tax funding under the COVID-19 Relief Program. The report lists the U.S. Small Business Administration as a top 10 unsecured creditor, with him claiming $500,000 in COVID-19 economic damage disaster loans.
NewChip also received two Paycheck Protection Program loans of $141,289 in March 2021 and $135,100 in April 2020, both of which were waived.
Newchip has raised $7.9 million in funding from accredited and non-accredited investors, according to Crunchbase. But the company has a history of losses. The company filed documents with the SEC and reported a net loss of $197,884 in 2016 and a net loss of $748,999 in 2017. It also claimed $4.5 million in operating loss carryforwards in its 2020 financial statements.
Newchip reported revenue of $2.6 million from selling its accelerator program to startups in 2020, and $781,000 in 2019, according to its consolidated financial statements.
Silicon Hills News has reached out to more than a dozen startups alleging that they received funding and failed to deliver on their accelerator program promises. And one of the startup founders, Angela DiMarco, co-founder of Uniquely Phenom Collaborations in New York, said she paid $7,500 to get through Newchip’s accelerator and was happy with the program.
“The education part was like getting an MBA. Where can you get an MBA for $7,500,” DiMarco said. “I had no idea what a KPI was and now I am very used to being able to walk into a room full of investors and negotiate a termsheet.”
But DiMarco said NuChip would not have an opportunity to sell to investors. She was scheduled to give a three-minute elevator pitch to investors last week, but it didn’t happen. She said she paid extra for the occasion and that she would try to get a refund.
John Lane of Vancouver, Washington is not a happy customer.
In 2020, Rain testified in support of the company during Accelerator’s onboarding process. He hadn’t started the program yet, but when he did, he was very disappointed. Mr. Laing has repeatedly asked the company to remove his name and testimony from his marketing materials, but he has not responded.
At the time, Laing was running a fintech startup and wanted to learn about crowdfunding. So he paid his $3,800 out of the $20,000 fee to join the accelerator.
“Less than a week and a half into the program, I realized that I had been duped,” he said. “This is the crappiest version of online education.”
Rain contacted her credit card company and canceled the remaining installments.
“All the owners I’ve known were optimists and they prayed for that optimism,” Lane said.
Newchip has promised to invest a minimum of $100,000 in his startup and will do so for all startups that pass the program. Unfortunately, he didn’t get the investment.
Rain said they prayed to a specific avatar, the founder looking for a solution to move the company forward.
Jari Kemppinen, founder of Soulbotix, an Australia-based company that develops custom metahumans powered by ChatGPT, joined the Newchip accelerator in February, paying $6,000 for “courseware that gets nowhere.”
“Seeking funding in Australia is a desperate endeavor,” Kempinen wrote in an email. But he was drawn to Newchip’s US-based offering of distance learning and participation without relocation. I also liked the connections the company promised and my introduction to Newchip’s extensive VC investment portfolio. Unfortunately, once Kempinen entered the program, he received little help from Newchip.
“I found that they lacked one-on-one communication, and I ended up navigating a huge amount of content by myself and without anyone’s help,” Kempinen said. “They seemed dependent on the founders to look after them.”
Kempinen has not yet been introduced to an investor and wants his money back.
This experience discourages him. “I’m starting to think the startup funding ecosystem is corrupt and worthless,” he says. To get funding, he said, it would take a lot of effort to produce so many documents. “It’s easy to build strong partnerships, be honest, and work with customers and partners.
According to a former Newchip employee, the company hired Austin-based Garibay Ventures to send spam emails to thousands of startup founders around the world, promising to introduce investors to new startups in paid programs. was recruited.
Ahmed Zobi, CEO and founder of Syntr Health Technologies, based in Irvine, Calif., received one such email from Anthony Garibay, CEO and founder of Garibay Ventures, which claims to be an investor. received.
According to an email, Garibay Ventures said it recently partnered with Newchip’s accelerator to “provide further exposure to investors[of which I am also part of].” The email contained a link to the Newchip accelerator application.
In November 2020, Zobi paid $4000 to join the Newchip program. NewChip told him the actual cost of the program was his $30,000, but they gave him his $26,000 scholarship. But when he received a 12-page contract from NuChip, it included a NuChip warrant, a clause that gave him the right to buy a certain number of shares in the startup at a set price. . Mr. Zobi showed it to his lawyer, who advised him not to sign it. he didn’t. And NewChip never confirmed whether the contract was signed. Zobi entered the program, but got little value out of it. His assigned mentor emailed him to tell him he was traveling to London. He then ghosted him. Zobi said the mentor never responded to follow-up emails or meeting requests.
“In the end, they didn’t even ask for the contract to be returned, so I knew something was wrong,” Zobi said.
“I think they were just looking to get as many startups as possible to sign up,” Zobi said.
Other startups that have paid to join Newchip’s global accelerator program have complained on social media, primarily LinkedIn, that the company has taken the money and lost resources. Additionally, some former employees have complained of harassment and a hostile working environment at NewChip’s workplace, according to former employees.
Newchip started in 2016 as a marketplace aggregating the best deals from various stock-based crowdfunding platforms. It was also selected as a participant in the Sputnik ATX Accelerator Program in Austin.
Newchip itself was not an equity crowdfunding platform. But the company advertised itself as a “fundraising kayak” and its website allowed unaccredited investors to invest in deals for as little as $100 at a time.
The company said it derives its revenue from transaction posting fees, investment fees, exchange trading fees, data analytics and partners.
Travis Brodean co-founded New Chip with Ryan Lafolls, then changed the name to Andrew Ryan.
In 2018, NewChip raised $647,000 from over 160 unaccredited investors at a valuation of $15 million on equity crowdfunding platform Wefounder. Its goal was to “become the NASDAQ of the alternative investment market.”
But at one point things went wrong, said a former employee, who spoke on condition of anonymity.
Newchip Accelerator has an F rating from the Better Business Bureau and has two complaints from 2022 alleging the company lied. One complaint says the startup paid him $6,000 to join the program with a money-back guarantee if the startup didn’t raise money through Newchip. However, the startup did not raise any money and Newchip refused to return the money.
Source link
