Newchip Reveal with Andrew Ryan Part I: Our Fight, Chapter 7 Liquidation, and The Long Road Ahead

To our Startups, our Mentor, and Investor Communities,

I deeply regret to inform you that our company Newchip Accelerator after 6+ years of supporting startups globally has faced a series of unfortunate events which have significantly impacted our operations.

First and foremost, I want to extend our sincerest apologies to all those involved who have been affected by these circumstances today as we work to rectify the situation and find a solution for all individuals moving forward.

Along with many other firms, we’ve encountered significant challenges during this global tech recession, which necessitated a downsizing initiative over Q4, again in Q1, and limiting the number of global economies we operated in this year.

In an effort to strengthen our position for the recession, our team pursued the filing of subchapter 5 to restructure our venture debts. This was done with the intention of emerging stronger and more resilient after the financial downturn.

We were not prepared for the restrictions that came with this process, nor the societal confusion about what a bankruptcy protection “re-organization” is vs. bankruptcy “liquidation” between our startups, our communities, and investors.

Regrettably, a few former employees saw an opportunity to exploit this situation and initiated a hostile takeover attempt. When their efforts failed, they then resorted to manipulating the court system in order to force the company into liquidation.

I testified to this yesterday, and while they refused to testify under oath themselves, the damage they did had already been done. I deeply regret that our organization and you all had to endure such malicious actions from individuals who once belonged to our team.

The greatest regret of my life is agreeing to this process and I don’t recommend it to any company in the future to “re-organize your debts” as you place everything in the hands of bureaucrats who have no experience in startups or tech.

At present, a dedicated team of investors and creditors are fervently seeking to challenge this decision, with the primary goal of identifying a constructive solution that would benefit the company and all associated stakeholders.

We are exploring all options, including a potential program buy-out. Our objective is to continue powering programs across the globe, with a commitment to delivering value to our creditors and ensuring the sustainable progress of our startups.

Regardless of this outcome though, many of our Venture Fellows and IR team members are still willing to volunteer and help. All employees have been locked out of critical systems at this time so it will be via personal emails.

Again, I sincerely apologize for the significant impact this has had on any of your experiences as this was not our goal outcome as I had already secured sufficient commits from investors to continue operations and the support of the majority of our creditors to voluntarily dismiss the bankruptcy protection provided by subchapter 5.

To further compound the situation, we experienced an alarming incident just yesterday when our office was targeted by a false emergency report, commonly known as a “swatting” that has led to numerous deaths around the country.

The report falsely claimed that our CEO was armed and threatening himself and the employees – this is just how far some of these individuals went to attempt to disrupt the hearing – placing the lives of the rest of the team in danger.

It is disheartening that this dangerous act coincided “coincidentally” within minutes of our hearing to voluntarily dismiss the bankruptcy proceedings, interrupting the preparations and planning for it and destabilizing the process.

These individual ex-employees then continued to harass the court through disruptive anonymous outbursts and Zoom trolling all throughout the proceedings.

We truly acknowledge and are in disbelief to not only the unsettling nature of the events of today, but their impact, and offer our sincerest apologies for the distress caused to all parties from our being forced into Chapter 7.

This was not our plan or intention when we entered this process given our investor network and capital access to go into a liquidation at any point nor did we need to.

We find ourselves in an unprecedented and challenging period for our company, for tech, our nation, and the world. I assure you that our investors and I have and are doing everything within our power to appeal the court’s decision.

In the event that the appeal is unsuccessful, we are seeking investors who may be willing to acquire the debts of around ~$4M or take over in a buyout from the trustee to drive continuity and new leadership – as we own that we fought, but we failed.

We want to help as many startups navigate this recession as possible and we believe this it critical to sustain our mission to ensure continuity of operations for our 1,000+ startups around the globe that paid for tuition and were active in our programs.

During this time, I kindly request your patience and understanding as we navigate through these complex circumstances together as a global startup community.

Again, I deeply apologize for any inconvenience caused, and I sincerely hope to find a swift and favorable resolution for all parties to this situation. We also extend our heartfelt apologies to all those affected including families and employees, and we appreciate your continued support and patience as we work to find a solution.

At Newchip, our journey was always motivated by an unwavering belief that innovation should be accessible and affordable for all. We embarked on a bold endeavor, fueled not by profits, but by the trust and support of our investors and startups and mentors, who believed in our vision just as fervently as we did.

Every limited resource we had was passionately channeled into nurturing our startups, in the hope of creating a world where everyone has an opportunity to thrive regardless of background, race, gender, creed, or their economic status.

In fact, we lost money year after year and when we did finally start to see profitability late last year, we invested it back into our startups as that is our goal and mission.

And we may not have fully achieved our dream but we achieved a slice of it as non-traditional founders ourselves who do not come from wealth or ivy league schools – we made it nearly 7 years and we helped so many startups over that time.

I also want to assure you as well that my cofounders and I barely paid ourselves for the majority of our companies existence to ensure we offered the most affordable program in the world by value to startups in every corner of the globe. There are no golden parachutes and we’ve been under controlled spending for months.

And while we are candid in acknowledging that not every startup we fostered reached their ultimate goals or graduated our rigorous programs, we are proud of the significant impact we made on the global startup landscape.

By giving countless individuals and teams a fighting chance through access they didn’t have before, we helped to reduce the failure rate of startups worldwide, a testament to our commitment to fostering entrepreneurship and innovation.

In 5 years if we learn we took it down to 88% just 10% from 99%, we moved the needle and we’ll be proud of our efforts even if we lose

We’ve weathered this journey with relentless determination for years, and it’s with a profound sense of regret that we witness the impact of this setback on the many lives touched by Newchip and thousands of jobs we supported.

Yet even in the face of this adversity, we stand by our core values and the vision that started it all. Our mission has always been larger than just one company—it’s about fostering a global community of innovators, dreamers, and doers.

And while this chapter may be forced to close, as we don’t know and can’t predict where it will go, I believe all ex-Newchippers will remain committed to the cause of innovation, and we sincerely hope that the seeds we have sown will continue to grow, inspiring new waves of innovation and entrepreneurship for years to come.

With over 3,000+ startups worldwide directly impacted by our work, and 1,000+ active in our programs, it’s heartrending to contemplate the void left by our departure from the startup scene and how that will impact the world to come.

Those that were here during the unprecedented challenge of the COVID-19 pandemic, I personally, along with my co-founder Nihar, made every possible effort to support each and every one of you – saving hundreds of employees.

I risked my health after my heart attack to keep moving forward and taking calls to help founders navigate the challenges of COVID-19 file for relief and make it through it, a testament to our unwavering commitment to our cause.

I understand that this brings little comfort in such challenging times, but it’s important to remember the dedication and sacrifices of all employees at Newchip for founders, and that those who can are willing to continue to volunteer to help.

We’ve poured years of our lives, our health, and myself and my cofounder worked to liquidate every possible asset we could to sustain our mission of supporting startups and will continue to do so to support startups.

Unfortunately, the current circumstances have left many of us facing personal bankruptcies now, but despite this hardship, our commitment to our shared vision remains steadfast and we will do everything we can to support our founders.

Andrew Ryan

Newchip Founder

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