Austin-based startup accelerator Newchip announced May 12 it is shutting down, the Austin Business Journal reported. "It's with a heavy heart that I announce the closure of Newchip today,” founder and CEO Andrew Ryan posted to LinkedIn, along with a lengthy explanation. The company, legally known as AstraLabs Inc., has been dealing with a chapter 11 reorganization case that started on March 17. On May 12, a bankruptcy judge ordered the case to be converted into a chapter 7 business liquidation. A meeting of creditors has been set for June 16. The Austin-based company was founded in 2016 by Ryan, Nihar Patel and Travis Brodeen and has operated a virtual incubator and accelerator to help early-stage founders grow their businesses. Newchip raised $7.9 million across several rounds of venture funding, including a $250,000 round in February this year, according to Crunchbase. Despite its history of connecting entrepreneurs with startup capital — Newchip's website boasts that it works with investors at Elevate Capital, DreamIt and others — the accelerator's finances have fallen into disarray, according to a May 10 motion from Shane Tobin on behalf of Eric Terry, the U.S. Trustee assigned to the case. The document states the company doesn’t have enough money on hand to cover its next payroll on May 15 or its other expenses.
