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On Deck tried to do everything. Now it’s trying to do less and better • TechCrunch

Erik Torenberg it’s not anymore the co-CEO of On deck, a technology company that is trying to produce the community in a way that helps the founders secure capital and advice. Torenberg, one of Product Hunt’s first employees and founder of investment firm Village Global, took over just a year ago. But now, as On Deck returns to its founder-focused roots and spins off its second business, Torenberg is returning to the role of president.

“Now that we are a leaner company with a focused mandate, it makes sense to return to our roots and operate as we always have for much of our history,” an On Deck spokesperson said via email. “Erik will remain deeply involved in On Deck, just as he has been since our inception.”

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

David Booth, who co-founded On Deck alongside Torenberg, will now be the only chief executive to lead 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 awkward trade-offs in two businesses, run by two CEOs, chasing two completely different customer segments and figuring out how this brand stretches to make everyone happy,” said a source. “Everyone in the room is talking about the same person.”

Today, people can go to On Deck’s website to sign up for their ODF program, which helps founders go from pre-idea to fundraising. It resembles a classic accelerator, but perhaps a step ahead of a Y Combinator. And instead of cash in exchange or check, founders shell out more than $2,990 to be part of the program. The next iteration, starting September 27, ranges from an onboarding process where founders are introduced to the community, to a weekly schedule on skills development and workshops. There are also services that help founders find other co-founders, prepare for the fundraising process, and build minimum viable products.

This appears to be On Deck’s flagship program right now, running over the course of an entire year. Other On Deck programs are shorter, ranging from eight to 10 weeks, and focus on different functions. On Deck Scale is for founders of high-growth, high-risk companies and costs $10,000 a year. Despite saying it is founder-focused, it still advertises programs to others in the startup world. On Deck Angels, to cite 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 Scholars it accepts can apply for and receive based on financial need. More than $2 million has been deployed since 2021). Execs On Deck is for experienced leaders looking for VP and C-suite roles in startups and costs $5,000.

While this appears to be different from the founder’s focus, which is advertising, On Deck sees this as related. “We are building the world’s most helpful community of angel investors and executives, both critical partners of the founders at every stage of the company’s formation,” the company told TechCrunch via email.

The revamped, smaller product offering comes after On Deck admitted difficulties in offering a focused product. “Over the past two years of hyper-growth, On Deck has launched communities that serve more than 10,000 founders and career professionals. Our team worked tirelessly to expand and cover a large surface area,” the co-founders wrote. in a blog post addressing the latest layoff. “However, this broad focus has also caused substantial tensions. What we’ve always designed as a strength – serving multiple user groups and building flywheels between them – has also fractured our focus and brand.”

tiger’s den

Narrow focus is also a matter of practicality. After Tiger Global quietly led a $40 million Series B on On Deck, assigning a $650 million valuation above the $175 million valuation that was assigned by investors in its Series A round – the hedge committed to another product being developed by On Deck, a venture fund, the sources say.

Tiger’s investment is designed to give a clearer view of the pre-seed and seed world. The funding round – first reported by The Information but remains unconfirmed by On Deck – it appeared to be the startup’s official entry into growth stage status. In return, On Deck got a massive valuation boost and an anchor investor for its new venture operation (one that likely had a well-known reputation for attracting 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 revenue, and a fund transferred it to bet on more long-term returns.

Sources say a terms sheet – a document – ​​was placed on the table. On Deck, in response, began announcing the Tiger fund’s commitment to other investors, finally drawing up a plan for a $100 million fund that could be used to invest in companies passing through its accelerator.

When it came time for an equity call, sources say Tiger Global told the startup that its fund commitment was still in legal due diligence. While the company declined to comment on its relationship with Tiger Global during the period, an On Deck spokesperson told TechCrunch that “due to delays in closing the fund’s LPs, On Deck’s holding company provided a call from equity credit to the ODX fund for… to meet its commitments to the 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 apparently being close to repeating its bets. On Deck did not comment on this situation when asked. TechCrunch reached out to a Tiger Global spokesperson for comment, but received no response prior to publication.

It’s not unheard of to see companies withdrawing compromise offers after committing to due diligence or in response to a worsening economic environment, despite the fact that it can ruin a round. It’s unclear why Tiger withdrew its pledge after leading an investment, but it’s clear that the company has had a tough time in public markets.

In the case of On Deck, sources say that Tiger pulling its commitment put On Deck in a precarious position. Without Tiger’s capital injection, On Deck was spending directly from its balance sheet, leaving it with only nine months of track left. Then came the layoffs.

On Deck would go through 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 that some employees are optimistic about because of the individuals involved. The spin-out company has no name, but it plans to launch in October. It’s generating revenue.

From accelerator to just a classic investor

It’s a slow return to focus. deck attendant Erika Batista he became a general partner at 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 his original vision.

When asked about the accelerator, On Deck said they no longer have a formal accelerator. He provided a detail that showed a new view of how he supports early-stage startups – perhaps one that requires less capital: Startups now receive $25,000 for 1% or even 2.5% ownership, compared to the previous deal in that 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 corporate risk arm that it is using to do business in the market, now with more mature founders who don’t like fixed terms. “Most comparable programs require founders to give up shares or receive equity from a specific investor,” a spokesperson said via email. “Many of our fellows are experienced, repeat founders who have gone through traditional accelerators in the past and prefer our highly curated, non-dilutive program for founders in the early stages of company formation. “

Since On Deck made these moves, Tiger Global has returned to its portfolio company with $5 million to fund the company, a check size that reportedly pales in comparison to its original commitment. Meanwhile, On Deck is returning to revenue-generating programs rather than basing its entire future on the accelerator model.

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

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