The Shocking Allegations Against a Hot-Shot Tech Founder

In late 2019, a seasoned startup investor took a meeting with a young Army veteran and UT Austin alum named Andrew Ryan. The 28-year-old was full of big ideas, claiming he was going to “democratize entrepreneurship” with a new program training startup founders.

His company, Newchip, would focus on the founders excluded from bigger accelerators like Y Combinator and Tech Stars and teach them how to approach venture capitalists and angel investors—all in a six-month remote course. The investor was impressed—as a person of color, he had struggled to raise money for his own startup—and told Ryan he wanted in. He handed him a check for $40,000.

He had no idea what a mistake that would turn out to be.

Once described as “Shark Tank for everyday Americans,” Newchip is now being liquidated by a U.S. bankruptcy court after racking up millions in debt and losing virtually all of its employees in a single week, according to filings from a U.S. trustee.

Ten former employees and investors who spoke to The Daily Beast said the company was not just another failed startup, but an encapsulation of the worst aspects of startup culture itself: a domineering and impulsive founder, bold but impossible-to-keep promises, rampant overspending, and a culture of unrelenting sexual harassment. A bankruptcy hearing last month ended with employees yelling “Liar!” at the CEO on livestream while police were called.

Ryan says the company’s failure is the result of a coup launched by angry employees and an overzealous investor trying to take over his company. But Scott Latham, a business professor at the University of Massachusetts, had a different take.

“This is straight out of Wolf of Wall Street,” he said. “‘I wonder what this guy will do next.”

Andrew Ryan was born Ryan Rafols, the son of immigrant parents in a small city outside Dallas. (He changed his name legally in 2021, as a means of “letting go of the past and becoming the man God has called me to be,” according to a LinkedIn post.) He graduated high school early and served four years in the military as a missile defense engineer before enrolling in a government major at UT Austin. While there, he took on ambitious projects from rechartering his fraternity to helping redraw the Austin City Council voting districts. In a “Greek of the Week” feature in The Odyssey from 2014, he told an interviewer his dream was to go into politics.

But two years later, Ryan dropped out of school to work on two startups: Newchip, which he founded with the help of industry veteran Travis Brodeen, and Campus Watch (now called Safer Technologies), an app he developed with several other undergrads. While Ryan lists himself as a co-founder of Safer Technologies on LinkedIn, one of the other initiators told The Daily Beast the team forced him out within weeks of the company’s inception due to his “toxic” leadership style.

“We did not align ourselves to his values and character, as a human being and as a businessman,” this person said, although Ryan told the Daily Beast he left voluntarily to work on other projects.

Newchip appeared to be a success. Conceived as an online marketplace for casual investors, the company raised $2 million in seed funding and drew more than 50,000 users in its first year in operation. Crunchbase ranked it one of the top accelerator and venture capital-funded companies in the world in 2018; a press release described it as “the largest equity crowdfunding market aggregator in the United States.”

In 2019, the company launched an accelerator program for tech startups—a remote 10-week curriculum that sought to teach founders how to raise money from venture capitalists and angel investors. It charged startup founders anywhere from $500 to $10,000 for a three- to six-month fundraising course, a mentor, and a “demo day” in front of potential investors. And it seemed promising, enrolling nearly 50 startups in the first cohort and 19 more later that year. By the end of the year, Brodeen had left the company and Ryan had sold the investment marketplace side of the business to focus exclusively on the accelerator.

Investors and advisers said they quickly began to notice problems. While Ryan was a smooth talker and skilled salesman, he was often bombastic and brash, veering between inflated promises, domineering mandates and personal attacks. He once bragged in a Slack message viewed by The Daily Beast that he would make a former contractor he was suing “rue the day he was fucking born.” One investor likened him to an evangelical preacher and P.T. Barnum; another bemoaned his tendency to “stretch the truth and exaggerate.”

Employees and investors, with Natacha Rousseau of PasciVite serving as a spokesperson, said Ryan also had a vise grip on company operations and the final call on every decision. The board tried to bring in an executive coach, one investor said, but Ryan fired him after two weeks. “He said, ‘I know more about this than this guy,’ and just walked away,’” this investor said.

In an email to The Daily Beast, Ryan defended his leadership style, saying that “driving a visionary company can sometimes require assertive communication and ambitious goal setting.” He added that the role of CEO “require[s] final decision-making authority in most companies,” but that he “emphasized a balanced approach.” He said the executive coach was never officially hired because it was too expensive and he would have been the only CEO enrolled in the group program.

More troubling to many was how Ryan treated female employees. One woman told The Daily Beast that Ryan frequently made comments on her appearance—whether she had lost or gained weight, what kind of cosmetic procedures she should get—and passed her dating profile around the office for review. He also asked invasive questions about her sex life, including when she last had sex. This employee provided screenshots of a text conversation with Ryan in which he suggested she try withholding sex from partners for 90 days and another in which asked if a date went well, followed by a winking emoji and smirking emoji.

A male employee said he heard Ryan walk into the office once and jokingly ask if it was cold enough, because one female employee was “already really hot.” Two male employees said they either witnessed or heard about Ryan inviting female employees over to his hot tub after work hours. The female employee provided screenshots of a conversation in which Ryan invited her to dinner and karaoke and hot tubbing at his house with “a few amigos” at 7 p.m., and told her she could “crash” at his place if she wanted to.

“Whenever a new woman was hired, me and the other girls would always be like, ‘Has he invited you to the hot tub yet?’” she said.

It got so bad that one male supervisor said he started hiring women to work remotely, so they did not have to be in the office with Ryan. If women did come in, he said, “we strategically placed them close to managers so someone was there if they felt uncomfortable.”

Ryan denied making inappropriate comments and asking employees about their sex lives. He said any invitation to his hot tub would have been “part of the broader social invitation to the small team at the time,” and called the allegation that seating arrangements were influenced by his behavior “fundamentally false.”

“These allegations appear to be part of an orchestrated effort by a group of employees who attempted a hostile takeover upon learning about an impending layoff,” he wrote in an email.

The most egregious example was Ryan’s treatment of a 21-year-old employee who joined in 2022, and told The Daily Beast she moved her college classes online in order to do so. Within days, she said, Ryan texted her personal cel phone inviting her to a company happy hour. When she arrived, he took photos of her and edited them on an app on his phone, telling her she’d look better with a different hairstyle. He continued to text her frequently in the weeks that followed, she said.

The situation escalated at a conference in Boston, where she says Ryan texted her to declare his romantic feelings.

“I just haven’t felt like I have with you with anyone else in years and it’s starting to hit me,” he wrote, according to screenshots provided to The Daily Beast. “You were a surprise to me, and working closely with you—you’re so smart and passionate, you just get me and that means a lot to me.”

The woman said she was so uncomfortable she called a friend for help composing a response that would communicate her disinterest while protecting her employment. “It was just so scary to me because I also didn't want to tell anyone at the company and be a problem,” she said. (This friend confirmed the employee’s account.)

The polite rejection only dissuaded his advances for a matter of weeks, she said. Two former employees said they witnessed Ryan lavishing this employee with gifts, giving her a gamer’s chair and a pink keyboard, and decorating her office with anime lights after he learned she liked Japanese culture. He once bought her a bouquet of flowers with a card addressed, in French, to “the one who leaves me speechless,” according to a photo she provided to The Daily Beast.

The woman says he also continued having her attend conferences with small groups and trying to create “alone time” for them. At one conference in Canada, she said, he invited her out to dinner for just the two of them. When she asked about the other staffer at the conference, Ryan told her he didn’t think he’d want to come, she said.

Ryan acknowledged to The Daily Beast that this employee had rejected his advances but said their relationship had developed, over the course of several months, into something that “extended beyond the professional realm.” He said they spent time together outside work and traveled together and that “a lot of the staff knew we were dating.” When the relationship ended, he said, he apologized to the employee and initiated an HR and board review.

As evidence of an alleged romance, Ryan provided dozens of photos of the two of them smiling and posing close together in various locations.

The employee, however, provided screenshots of a conversation from September in which she wrote that she had “made the context of our relationship very clear to you repeatedly, ie; I view our relationship as mentor:mentee.”

“[This has] left me feeling uncomfortable and alienated as an employee working under you,” she wrote in response to yet another text from him declaring his love. “I think you are putting me in an unfair position as someone who is 10 years your junior, and with not nearly as much life experience. To reiterate, I don’t have romantic feelings toward you.” Her friend also told The Daily Beast the woman had repeatedly asked Ryan to stop contacting her outside of work and had even tried to report the situation to higher-ups at the company, to no avail.

In November, the employee says, she informed the human resources department she was seeing someone else at the company, and Ryan fired both of them that day.

Ryan said he demanded their resignations after a “blow up” between them at the office, though he said it was because they had violated a rule against managers dating subordinates. He acknowledged that “there's hypocrisy in that.”

Soon after, Ryan sent the woman a rambling, 23-minute voice memo in which he called her a “coward” and a “hollow empty shell of a person,” and told her she had “not only the CEO’s ear, but his literal balls in a bag.”

He ended by offering to rehire her if she apologized and attended therapy once a week. “This is not my kindness or my mercy, this is only a surrender for you,” he added. She did not take him up on the offer.

Ryan told The Daily Beast he’d felt pressured by employees to offer the woman her job back. “I don’t really remember this evening, I think I’d had some drinks,” he said.

It wasn’t only women who were complaining about Ryan. Three investors told The Daily Beast they were deeply concerned with how he presented the company’s value. Newchip took out warrants for every company it enrolled in the accelerator, meaning it had the option to purchase up to $250,000 of stock in that company within 10 years. The value was speculative, based on how well the companies performed, and one investor said it was unlikely more than 20 percent of them even raised another round of funding. But three people said Ryan insisted the warrants could value Newchip at anywhere from $700 million to $1 billion.

“There was no way the warrants were [worth that much] and he knew it,” a former executive told The Daily Beast, adding that Ryan was “saying horrifically untrue things, and he was raising money off of it.”

Ryan provided The Daily Beast with a report prepared by Sputnik ATX, an investor in Newchip, that put the “estimated future unrealized returns” at $760 million.

There were also an increasing number of complaints from program participants. As part of its sales process, the company promised founders a set number of introductions to interested investors, and later started promising companies at least one guaranteed investment or “term sheet”—something one investor said was “completely absurd.” (Ryan said only a small number of contracts contained this language and it was removed.)

But Newchip also included small caveats in the contract, which an employee said Ryan invoked when founders did not get the promised investment and demanded a refund. In an email to employees about the refund process, Ryan wrote, “the goal is to make it such a high hill that in reading it, an entrepreneur will know they will not be able to provide evidence of something above.”

At the same time, this employee said, Ryan was obsessed with getting negative reviews of the company scrubbed from the internet. When the ratings on sites like Trustpilot got bad enough, this employee said, Ryan would instruct him to offer unhappy founders a refund to take down a bad review and threatened to fire him when he pushed back.

“Get the reviews down I don’t care tf who does it,” Ryan wrote in a text message to the employee reviewed by The Daily Beast. “Get them down or find a new job … Don’t go against a directive I put out again.”

Ryan told The Daily Beast he offered refunds as part of an ongoing negotiation process with unhappy companies and did not proactively reach out to companies that posted bad reviews.

By the start of 2023, the situation at Newchip was dire. The tech economy was in freefall, and startups were cutting back on expenses like accelerators. Ryan told The Information in May that monthly revenue had fallen more than 50 percent, from $2 million in October 2022 to $850,000 in April 2023, and that the company was losing $500,000 per month by then. It had also quadrupled in size over the last year, requiring large-scale layoffs in November, and started taking out hundreds of thousands of dollars in high-interest cash advances. “It just started to feel desperate at that point,” a former investor told The Daily Beast.

By March, Newchip leadership had decided the only way to control the losses was to file for bankruptcy to restructure the company's debt. Its March 17 petition for reorganization under Chapter 11 bankruptcy listed just $1.7 million in assets and $4.3 million in debt; the company borrowed $542,804 in the first three months of 2023 to cover expenses like loan repayments and the building lease.

The mood at Newchip grew even more tense after the bankruptcy. One former employee said Ryan did not announce the filing to employees, and later told them he did not think it was important enough to mention. Rumors swirled about whether the company had enough money to make payroll.

On May 3, the employees arrived at work to learn that the general counsel, board chair, and newly hired vice president of operations were gone.

In Ryan’s telling, the departure of the executives—and the ensuing chaos—was the result of a coordinated effort to push him out and take control. He claims the board chair, who was also an investor, pressured him into taking $100,000 to cover expenses with a requirement to pay it back within 10 days or cede control—then conspired with other executives to keep him from paying back the loan. When Ryan discovered this alleged plot, he said, he fired all involved.

“There was a giant plan to try and oust me … and take over the company and they got caught,” he said in a phone call with a former employee, a recording of which was reviewed by The Daily Beast. “They’ve all been let go.”

Employees were flabbergasted by the firings. On May 4 employees staged a walkout and demanded Ryan reinstate the executives.

“These key personnel were instrumental in maintaining the company's integrity and fostering a transparent work environment,” they wrote, in a letter reviewed by The Daily Beast. “The employees believe that their removal has led to an erosion of trust and morale within the organization, creating a toxic work environment.”

Ryan responded with several town hall meetings in which he cried and pleaded with employees to return to work, even promising to step down, two people present said. When that didn’t work, employees who walked out received an email from “legal@newchip.com” threatening legal action if they did not return to the office.

By the end of the week, according to the bankruptcy trustee’s filing, 60 employees had quit—a figure Ryan disputed.

Ryan maintains that disgruntled employees and greedy executives were the cause of the collapse. He said the fired board chair had spread “false allegations and misinformation” after his removal, and that “certain individuals took advantage of this chaos in an attempt to force the company into liquidation, potentially with the intention of acquiring the company's assets at a significantly reduced value.”

“Mr. Ryan is disconcerted that a small group of discontented ex-employees and contractors persist in their attempts to tarnish the reputation of the company through false allegations, including the reputations of its many dedicated employees, and it's [sic] countless stakeholders around the world,” he added in an email to The Daily Beast.

On May 11, Judge Shad Robinson of the U.S. Bankruptcy Court for the Western District of Texas held a hearing on a motion to convert Newchip’s bankruptcy to Chapter 7, also known as liquidation.

The trustee, Kevin Epstein, argued that the company should be liquidated for lack of funds and employees and noted Ryan’s firing of multiple key executives and attempts to fundraise without required court approval. He also claimed that Newchip had “deliberately omitted assets from its schedules”—an apparent reference to the warrants, which were not listed on the bankruptcy application because, Ryan told The Daily Beast, they had no real value until sold.

During the videoconference hearing, Ryan spoke for more than an hour against the advice of counsel. Three hearing attendees said employees on the video call came off mute to yell “Liar!” as Ryan spoke. Police were called to his location in what employees said was a wellness check but Ryan described a “swatting attempt.”

The judge ordered the bankruptcy to be moved to liquidation the next day, though four creditors have objected. A hearing on their motion is scheduled for June 23.

The female employee who alleges that Ryan made sexual comments said she listened to the hearing and attended Ryan’s town halls. She likened the end of the company to a bad breakup, saying she sometimes still dreams about being back at the office. She has since been hired elsewhere and is thriving in her new role, she said, but added: “I really do feel like I need therapy after the last three years.”

She said she hopes Ryan will take more accountability for his role in the company’s demise.

“I feel bad for the guy … and at the same time I don’t,” she said. “Because there were so many people who tried helping... and his pride played such a part in the downfall of Newchip.”

She added: “I still don’t know to this day whether he has good or bad intentions.”

In the days following the bankruptcy healing, Ryan said he was working to keep the liquidation from proceeding, even suggesting he could raise money to buy Newchip out of bankruptcy. In an interview with TechCrunch, he said he was “in search of a white knight” to support the company and take over its programs.

By last week, however, Ryan had changed his LinkedIn bio to refer to his time at Newchip in the past tense.

“I’m looking for a new leadership role, an opportunity to apply the wisdom I’ve gained, and the chance to inspire and guide new teams towards impactful solutions,” he wrote.

“I am seeking collaborators, fellow innovators, and driven teams that share my passion for creating a sustainable and inclusive future,” he added. “Together, we can transform the seemingly impossible into the achievable.”

Editor’s Note: This story has been updated to reflect that the warrant report Ryan provided said Newchip could be worth up to $760 million and that the three executives left the company on May 3.

Read more at The Daily Beast.

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