Newchip, an online accelerator promising to help startups, has filed for bankruptcy and is now facing insolvency amid employee and client discontent.

Dozens of employees of the troubled organization staged a walkout on May 4, demanding that founder Andrew Ryan step down as CEO.

Ryan — who previously went by the name of Ryan Rafols — started Austin-based Newchip in 2016 after spending more than seven years as a city commissioner in Austin, according to his LinkedIn profile. 

Newchip initially started out, according to Grit Daily, “as an aggregator of top deals from various equity-based crowdfunding platforms,” and later evolved into its current accelerator model. In his LinkedIn profile, Ryan describes Newchip as an entity that provides “entrepreneurs with all of the skills and tools necessary to build, scale, and fund their startups from launch to exit” via its “online global accelerator and venture fund.”

Essentially, Newchip presented itself as an accelerator that would help startups meet and raise money from investors and grow their companies for a fee. But the accelerator failed to deliver on a number of its promises, some employees say, and left hanging founders who had signed up.

Some founders argued, in interviews with TechCrunch and in at least one public post discussion on LinkedIn, that Newchip’s fee — which varied from a few thousand dollars to up to $18,000 or $20,000 — was too high and not worth the services provided. Some insisted that it was difficult to impossible to get a refund when the accelerator did not follow through.

Chief among the long list of complaints by eight former employees who walked out and were interviewed by TechCrunch is “mismanagement” on Ryan’s part. The executive, they claimed, regularly was aggressive toward individuals in the company via written and verbal communications, and made poor decisions regarding leadership roles. 

One former employee who wished to remain anonymous told TechCrunch: “He would routinely often hire either naïve or ‘yes man’ type employees and get absolutely ruthless and degrading and demeaning to people while saying things like ‘I’m too good to be wasting my brilliance on this’ and just scream at people.”

In response as to whether he was demeaning to employees, Ryan acknowledged that his leadership style was based on “a military mindset” and that “there have been moments where the line between accountability and conflict has blurred.” He also admitted that in one particular instance, he could see how his reaction “might have come across as demeaning.” Ryan also added that he’s been “known to walk out of or abruptly end meetings lacking an agenda, emphasizing the importance of preparation.”

In a Zoom interview with TechCrunch and in two different LinkedIn posts (which can be found here and here), Ryan largely blamed the macro environment, managers and employees for the company’s demise.

Via email, Ryan said he ultimately accepted “full responsibility for the events at Newchip.”

He claimed to currently be “in discussions with numerous VC firms, family offices, and PE firms to formulate a continuity plan.”

Newchip, operating under Astralabs, filed for Chapter 11 bankruptcy in March, revealing that it had just $1.7 million in assets compared to $4.8 million in liabilities. Last week, a bankruptcy judge ended up converting the case to Chapter 7 liquidation. This is unsurprising, considering that, according to Grit Daily: “While Newchip raised $7.9 million from accredited and nonaccredited investors, Crunchbase data reveals a troubling history of financial losses. SEC filings show a net loss of $197,884 for 2016, a $748,999 loss in 2017, and the company claimed $4.5 million in tax loss carryforwards in its 2020 financial statements.”

Ryan claimed the employees staged the recent walkout to protest the fact that the company was going to be laying off more employees, and were led by a Newchip investor. While Ryan did not name the investor, that individual is believed to be Joe Merrill, who also served as chief of Newchip’s board. (TechCrunch reached out to Merrill but he did not respond to requests for comment.) Ryan added that the accelerator had already conducted several rounds of layoffs over the previous six months, going from more than 200 employees to about 75 at the beginning of this month.

Speaking to TechCrunch, Ryan said: “We had to make cuts across the team and there was gonna be massive layo