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

Erik Torenberg is not anymore the co-CEO of On Deck, a tech company that tries to produce community in a way that helps founders get capital and guidance. Torenberg, one of Product Hunt’s first employees and the founder of investment firm Village Global, took over just a year ago. But now, as On Deck returns to its founder-focused roots and creates its second business, Torenberg returns to a position of president.

“Now that we’re a leaner company with a focused 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 remain deeply involved in On Deck, as he has been since our debut.”

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

David Booth, who co-founded On Deck alongside Torenberg, will now be the sole chief executive to lead the company. The company has raised tens of millions of dollars 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 companies, run by two CEOs, catering to two completely different customer segments and figuring out how this one brand fits together. expands to make everyone happy,” a source said. “Everyone in the room is talking about the same person.”

Today, people can head to On Deck’s website to apply for its ODF program, which helps founders go from pre-idea to fundraising. It looks like a classic accelerator, but maybe a bit earlier than a Y Combinator. And instead of an equity swap or a check, founders pay over $2,990 to be part of the program. The next iteration, starting September 27, ranges from an onboarding process in which Founders are introduced to the community, to weekly skill development programming and workshops. There are also services that help founders find other co-founders, prepare for the fundraising process, and build minimum viable products.

This seems to be On Deck’s flagship program right now, which runs for a full 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, large-scale businesses and costs $10,000 per year. Although it focuses on founders, it still advertises programs for others in the startup world. On Deck Angels, to take another example, is for angel operators interested in expanding their network or creating a fund, and costs a $5,000 donation to the On Deck Access Fund (the scholarship fund of studies from On Deck which fellows it accepts can apply for and receive based on financial need (over $2 million has been deployed since 2021) Execs On Deck is for experienced leaders seeking vice -president and suite C in startups and costs $5,000.

While this appears to be different from the Founder’s goal it advertises, On Deck considers it related. “We’re building the world’s most valuable community of angel investors and executives, both of whom are essential partners to founders at every stage of building the business,” the company told TechCrunch via email. .

The revamped and smaller product offering comes after On Deck admitted to struggling to offer a targeted product. “Over the past two years of hyper-growth, On Deck has launched communities serving over ten thousand founders and career professionals. Our team has worked tirelessly to expand and cover a large area,” wrote writes the co-founders in a blog post discussing the latest layoff “However, this broad focus has also caused significant tension. What we have always projected as a strength – serving multiple user groups and building flywheels between them – also fractured our focus and our brand.

The Tiger’s Lair

Restricted focus is also a matter of practicality. After Tiger Global quietly led a $40 million Series B in On Deck, giving it a $650 million valuation compared to the $175 million valuation given to it by investors during its series A – the hedge fund engaged in another product developed by On Deck, a venture capital fund, sources say.

Tiger’s investment was designed to give him a clearer view of the world of pre-seed and seed. 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 boost and a lead investor for its new venture capital operation (which probably had enough of a reputation to interest other investors).

Tiger Global then committed money to On Deck’s vision for an ODX fund, an investment vehicle that would help it launch an accelerator. Until then, On Deck charged membership fees to generate income, and a fund would move it to bet on longer-term returns.

Sources say a term sheet – a document – has been put on the table. On Deck, in response, began publicizing the Tiger fund’s commitment to other investors, eventually laying out a plan for a $100 million fund that he could use to invest in companies passing by its accelerator.

At the time of a capital call, sources say Tiger Global told the startup that its fund commitment was still undergoing due diligence. While the company declined to comment on its relationship with Tiger Global at the time, an On Deck spokesperson told TechCrunch that “due to delays in closing the LP funds, On Deck’s holding company Deck provided a capital credit call to the ODX fund to…enable it to honor its commitments to portfolio companies.

Ultimately, sources say Tiger Global withdrew its commitment to invest in the On Deck fund, although it invested in the company itself and is set to repeat its bets. On Deck did not comment on this situation when asked. TechCrunch reached out to a Tiger Global spokesperson for comment, but did not hear back by press time.

It’s not uncommon to see companies pull term sheet offers after doing their due diligence or in response to a deteriorating economic environment, even if it can ruin a round. It’s unclear why Tiger withdrew its term sheet after leading an investment, but of course the company has had a tough time in the public markets.

In the case of On Deck, sources claim that Tiger pulling his pledge put On Deck in a precarious position. Without Tiger’s capital injection, On Deck had spent directly from its balance sheet, leaving it with only nine months of trail. Then came the layoffs.

On Deck would suffer several rounds of cuts in May and August. The first round of layoffs was not enough, sources said. The company then launched its Career Services Platform, an effort some employees are optimistic about because of the people involved. The spinoff company has no name, but plans to launch by October. It generates revenue.

From accelerator to simple classic investor

It is a slow return to concentration. Employee on the bridge Erika Batista became a general partner of the On Deck fund last month after helping build the company’s European accelerator. The fund, On Deck tells TechCrunch, is $23 million, about a quarter of its original vision.

When asked about the accelerator, On Deck said he 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: Startups are now being offered $25,000 for 1% or up to 2, 5% ownership, compared to the previous deal in which startups were offered $125,000 for 7% of the startup.

It may not have a $100 million fund to fuel its accelerator, but it does have a venture capital arm that it uses to do market deals, now with more mature founders who don’t like fixed conditions. “Most comparable programs require founders to forfeit equity or take capital from a specific investor,” a spokesperson said by email. “Many of our Fellows are experienced, repeat Founders who have gone through traditional accelerators in the past and prefer our highly organized, non-dilutive Founder Program in the early stages of company building. “

Since On Deck took these steps, Tiger Global has reportedly returned to its holding company with $5 million for the company’s fund, a check amount that would have paled in comparison to its initial commitment. On Deck, meanwhile, is returning to revenue-generating programs instead of basing its entire future on the accelerator model.

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

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