Equity Newchip's bankruptcy is a cautionary tale for founders
May 15, 2024
Discover the cautionary tale of Newchip's bankruptcy and its ripple effects on startups. Delve into the questionable practices of accelerators and their hefty fees for founders. Learn about the disparities in support for struggling startups and the harsh realities they face when financial troubles hit. The podcast also scrutinizes the landscape of accelerator programs using Newchip as a case study, urging founders to make informed choices about their paths to success. This discussion is both engaging and eye-opening!
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Cautionary Tale for Founders
- Founders should be cautious when signing up for accelerator programs.
- Carefully review any contracts, especially clauses involving equity, warrants, or the company's control.
Founder Forced to Shut Down
- Christina Lacey Hunter had to shut down her company after trying to reclaim warrants from Newchip.
- A bank she approached couldn't risk working with her due to the complexities of the cap table.
Clever Investment Strategy
- Buying warrants in bulk can be a clever investment strategy.
- It allows for spread betting on the future success of startups with minimal upfront cost.