Newchip's bankruptcy is a cautionary tale for founders

Equity

TechCrunch

Entrepreneurship, Business News, News, Business, Technology

4.2 • 372 Ratings

🗓️ 15 May 2024

⏱️ 23 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

For months, TechCrunch Senior Reporters Mary Ann Azevedo and Christine Hall have been following the story of Newchip's bankruptcy and its impact on founders and today on Equity, they're joined by Haje Kamps to dig deep into how the accelerator’s fall from grace threatened the cap tables of thousands of startups. In some cases, companies suddenly were so high risk to banks and investors that they had to shut down. The trio also discussed the broader accelerator landscape as a whole, considering what also recently took place at Techstars. It's a lively and hopefully helpful discussion you won't want to miss! Equity is TechCrunch’s flagship podcast, produced by Theresa Loconsolo, and posts every Monday, Wednesday and Friday. Subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts. You also can follow Equity on X and Threads at @EquityPod. For the full episode transcript, for those who prefer reading over listening, check out our full archive of episodes over at Simplecast. Credits: Equity is produced by Theresa Loconsolo with editing by Kell. Bryce Durbin is our Illustrator. We'd also like to thank the audience development team and Henry Pickavet, who manages TechCrunch audio products. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	Hello and welcome back to Equity, Tech Crunch's flagship podcast about the business of
0:16.2	startups.
0:17.2	I'm Marianne Asavato and as you may have noticed we're shaking things up here on
0:21.0	equity and today is no different. Instead of our usual
0:24.4	interview show today I'm joined by Tech Crunch senior reporter Christine Hall
0:28.2	and my new Equity co-host Haya Camps. Christine Hay Haya, hello, so happy to have you here.
0:35.1	Hello.
0:36.1	It's so good to be here.
0:37.4	I'm so happy to sit here in this very luxurious co-host chair.
0:41.6	Well, it suits you well. So Christine, we are talking about a story today that you and I worked on together for months. It was about an accelerator that is now defunct called New Chip was based here in Austin, Texas where I'm located and wow
0:58.4	To say there was a lot going on here is an understatement.
1:02.6	Yes.
1:03.6	This accelerator went bankrupt or filed for bankruptcy last year and you know the drama didn't end
1:09.5	there.
1:10.4	All sorts of things have gone down since then. So we're here to kind of dissect and discuss today.
1:15.8	It's been such an interesting thing to follow you guys covering this story.
1:19.7	So it seems like a big part of the problem with this bankruptcy is related to
1:23.6	warrants and you know I'm guessing we don't mean police warrants here what are
1:27.6	warrants and why does this matter in the context of an accelerator?
1:30.3	Yeah so to describe warrants I'll try to simplify this as much as possible. So when they signed up for this accelerator program,
1:37.8	startups granted New Chip the right to buy $250,000 worth of shares in their company at a later date, but at their
1:45.1	current valuation.
	...

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