On Deck tried to do it all.  Now, it’s trying to do less, better • TechCrunch

On Deck tried to do it all. Now, it’s trying to do less, better • TechCrunch

Erik Torenberg it is no longer the co-CEO of On Deck, a technology company that is trying to produce in the community in a way that helps founders get capital and advice. Torenberg, an early Product Hunt employee and founder of the investment firm Village Global, took over the role just a year ago. But now, as On Deck returns to its founder-centric roots and spins off its second business, Torenberg returns to a chairman role.

“Now that we are a more agile company with a specific mandate, it makes sense to go back to our roots and operate as we have for much of our history,” an On Deck spokesperson said by email. “Erik will continue to be deeply involved in On Deck, just as he has been since our inception.”

The move, shared internally with staff last week, is the latest shakeup at the company, which cut a third of its staff months after cutting a quarter of its workforce. Other changes to the well-known startup include the demise of several communities and the spin-off of its advanced racing arm into a new separate business entity. The spinoff cements On Deck’s goal of becoming a more founder-focused business rather than a broad platform where anyone looking for a community in the tech world can look for a host of services.

David Booth, who co-founded On Deck with Torenberg, will now be the sole CEO at the helm of the business. The company has raised tens of millions in venture capital from investors including Founders Fund, Village Global and Tiger Global. On Deck told TechCrunch that Booth was unable to do a phone interview due to a family obligation today.

“A lot of people are a lot happier because they don’t have to make so many weird trade-offs between two businesses, run by two CEOs, looking at two completely different customer segments and figuring out how this brand spans to make everyone happy,” a source said. “Everyone in the room is talking about the same person.”

Today, people can go to the On Deck website to apply to its ODF program, which helps founders go from pre-idea to fundraiser. It looks like a classic accelerator, but maybe a step up from a Y Combinator. And instead of cash or a check, founders shell out more than $2,990 to be a part of the program. The next iteration, starting on September 27, ranges from an onboarding process where founders are introduced to the community, to weekly skill-building programming and workshops. There are also services that help founders find other co-founders, prepare for the fundraising process, and create minimum viable products.

This appears to be On Deck’s flagship show currently, taking place over the course of an entire year. Other On Deck programs are shorter, ranging from eight to 10 weeks, and focus on different roles. On Deck Scale is for founders of high-growth, venture-scale companies and costs $10,000 per year. Despite saying it focuses on founders, it still advertises programs for others in the startup world. On Deck Angels, to pick another example, is for angel operators interested in expanding their network or starting a fund, and it costs a $5,000 donation to the On Deck Access Fund (the On Deck scholarship fund that fellows that accepts can apply and receive based on financial need (Over $2 million has been deployed since 2021). Execs On Deck is for experienced leaders seeking VP and C-suite roles in startups and costs $5,000.

While this seems to be different from the advertised founder’s approach, On Deck sees it as related. “We are building the world’s most helpful community of angel investors and executives, who are critical partners to founders at all stages of company formation,” the company told TechCrunch via email.

The revamped, smaller product offering comes after On Deck admitted difficulties offering a focused product. “In the past two years of hypergrowth, On Deck launched communities serving more than ten thousand founders and career professionals. Our team worked tirelessly to expand and cover a large acreage,” the co-founders wrote in a blog post about the latest layoff. “However, this broad approach also caused substantial tensions. What we have always projected as a strength – serving multiple user groups and building flyers between them – also fractured our approach and our brand.”

tiger’s den

The reduced focus is also a matter of practicality. After Tiger Global quietly led a $40 million Series B on On Deck, assigning it a $650 million valuation above the $175 million valuation investors placed on it in its Series A round: The hedge fund committed to Another product On Deck is developing, a hedge fund, the sources say.

Tiger’s investment was designed to give you a clearer view of the world of seeds and seeds. The funding round, first reported by The Information but not confirmed by On Deck, appeared to be the startup’s official entry into growth-stage status. In return, On Deck got a massive valuation increase and an anchor investor for its new venture (one who probably had a well-known enough reputation to interest other investors).

Tiger Global went on to commit money to On Deck’s vision of an ODX fund, an investment vehicle that would help it launch an accelerator. Up until that point, On Deck charged membership fees to generate income, and a fund would trade it in to bet on longer-term returns.

Sources say that a term sheet, a document, was put on the table. In response, On Deck began announcing the Tiger fund’s commitment to other investors, ultimately drawing up a plan for a $100 million fund that it could use to invest in companies going through its accelerator.

When it came time for a capital call, sources say Tiger Global told the startup that its funding commitment was still undergoing legal due diligence. While the company declined to comment on its relationship with Tiger Global during that time, an On Deck spokesperson told TechCrunch that “due to delays in closing the funds’ LPs, On Deck’s holding company provided a capital credit call to ODX fund to…enable it.” to meet its commitments to portfolio companies.”

Ultimately, sources say Tiger Global withdrew its commitment to invest in the On Deck fund, despite having invested in the company itself and appearing close to repeating its bets. On Deck did not comment on this situation when asked. TechCrunch reached out to a spokesperson for Tiger Global for comment but did not receive a response by press time.

It is not unheard of to see companies withdraw offers from term sheets after conducting due diligence or in response to a worsening economic environment, even though it may ruin a round. It’s unclear why Tiger withdrew its term sheet after leading an investment, but of course the company has struggled in the public markets.

In the case of On Deck, sources say Tiger’s withdrawal from their engagement put On Deck in a precarious position. Without Tiger’s injection of capital, On Deck had been spending directly from its balance sheet, leaving it with just nine months of track remaining. Then came the layoffs.

On Deck would suffer several rounds of cuts in May and August. The first round of layoffs was not enough, the sources said. The company then launched its professional services platform, an effort some employees are excited about because of the people involved. The spin-out company does not have a name, but it plans to launch in October. It is generating income.

From throttle to classic inverter

It is a slow return to focus. employee on deck Erika Batista became a general partner in the On Deck fund last month after helping build the company’s European accelerator. The fund, On Deck tells TechCrunch, is $23 million, or about a quarter of the original vision for it.

When asked about the accelerator, On Deck said that it no longer has a formal accelerator. He provided a detail that showed a new take on how he supports early-stage startups, perhaps one that requires less capital: $25,000 is now being offered to startups for 1% or up to 2.5% ownership, compared with the previous deal in which startups were offered $125,000 for 7% of the start-up.

He may not have a $100 million fund to power his accelerator, but he does have a corporate venture arm that he’s using to market deals, now with more mature founders who don’t love fixed terms. “Most comparable programs require founders to give up stock or take capital from a specific investor,” a spokesperson said by email. “Many of our fellows are seasoned, repeat founders who have been through traditional accelerators in the past and prefer our highly curated, non-dilutive program for early-stage founders. “

Since On Deck has made these moves, Tiger Global is reported to have returned to his holding company with $5 million for the firm’s fund, a check size that reportedly pales in comparison to his original commitment. Meanwhile, On Deck is returning to revenue-generating programs instead of basing its entire future on the accelerator model.

“Tiger Global is a valuable LP in our fund and in our corporation,” a spokesperson said by email. “We have no further comment on this relationship.”

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