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Nawal
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SELF • 1y
❗️Bankruptcy of Austin-based accelerator Newchip leaves founders in distress as court orders auction of warrants in over 1,000 startups. Founders like Lacey Hunter of TechAid and Garrett Temple of Novogiene forced to shut down companies as warrants make future funding difficult. Despite hefty fees, founders claim little value from Newchip. Court aims to sell warrants to settle $4.8-million debt, undermining startups' valuations. First tranche of 28 warrants sold for just $58,000, with over 1,400 more to be auctioned. Cautionary tale about giving up equity stakes or warrants to accelerators. Do thorough due diligence and prioritize retaining control over your startup’s cap table. Accelerator bankruptcies can have devastating ripple effects on supported companies.
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