Happy Monday Y’all!

Let’s get the ball rolling this Monday! First, off…I’ll be in Taiwan, South Korea, and Japan for the month of October. Reach out and let me know if you’re in those areas and want to meet up while I’m in that neck of the woods. I used to spend six months out of every year working in China so I’m actually pretty excited to go back to Asia and meet more folks in the tech ecosystems in different areas. Also, let me know if you have any recommendations for food and activities in Taipei, Seoul, and around Japan. And also get excited to read all about my travels when I’m back!

This week almost everything we’re talking about is making me feel a certain way. I’m thinking about my own startup founder journey. I’m thinking about my family. I’m thinking about letting go of the past. I came across this lil’ excerpt of a speech by an Indian philosopher and I wanna share it with y’all in case you’re at a place in your life where you’re struggling with the past.

And Now…On to THE FUTURE!

Things You Should Know to Sound Smart

Ozempic Gives Memory Vibes

As y’all know I’m a diabetic. I got the ‘beetus. Down Bad.

But what you might not know…is that every single woman in my family has suffered from Alzheimer’s disease as they aged. I’m incredibly sensitive to any changes in my memory and as I get older I worry more and more that a dark, genetic cloud is looming over my future. But, I’m starting to see light on the horizon after news that GLP-1 drugs like Ozempic might help me in the fight against Alzheimer’s.

Here’s what you need to know about this…

So, GLP-1 receptor agonists are presently approved for treating type 2 diabetes and obesity. For the healthy one’s out there GLP-1 is a hormone that aids insulin secretion post-eating, leading to a sense of fullness and prompting cells to absorb glucose from the bloodstream. Though initially found effective for diabetes, GLP-1 is produced in the central nervous system, especially in the brainstem. Its receptors are found in multiple brain regions.

The brain, though only 2-3% of the body’s weight, uses around 20% of its energy. Aging leads to increasing insulin resistance across the body. This resistance means the brain's active neurons, particularly those in memory and learning regions, can be deprived of glucose, leading to neurodegeneration.

Alzheimer’s is sometimes labeled as "type 3 diabetes" due to the role of insulin resistance. A 2022 article suggested drugs targeting GLP-1 for diabetes could be repurposed for Alzheimer’s. Animal studies show that GLP-1 receptor agonists can decrease neuroinflammation and oxidative stress, both contributing factors to Alzheimer's.

A study (Phase II ELAD) presented at the 2023 International Conference on Alzheimer’s indicated positive outcomes from Novo Nordisk’s drug, liraglutide, for Alzheimer's patients. Those on liraglutide had a slower decrease in brain volume and cognitive capacity than those on a placebo. In 2021, Novo Nordisk began two Phase III trials with around 3,700 early-stage Alzheimer's patients. Results are expected by September 2025. At Kariya Pharmaceuticals, Christian Hölscher is developing drugs designed to be more effectively taken up by the brain. These drugs combine GLP-1 with another hormone, GIP.

A significant hurdle is the lack of awareness about GLP-1 among Alzheimer's researchers and vice versa among diabetes experts. Nonetheless, GLP-1 drugs are deemed safe, easily administered, and could potentially be used in tandem with other Alzheimer's treatments due to different mechanisms of action.

Other drugs, like Leqembi and donanemab, have shown promise in reducing Alzheimer's progression. However, the ultimate goal remains 100% prevention or slowing down of the disease.

In essence, while GLP-1 drugs are traditionally associated with treating diabetes, recent studies hint at their potential effectiveness against Alzheimer's disease. As research advances, there's hope that these drugs, possibly in combination with others, might offer a more comprehensive solution to Alzheimer's.

The Startup Apocalypse Has Arrived…Now What???

How to Properly Shutdown a Startup

Every single week I have about 3-5 founders who reach out to me about shutting down their company. In fact this week it has been a record 15. They’re confused. They’re sad. They’re desperate. I hate these conversations. But without being more transparent and honest about shutting down companies we are giving an incomplete view of the entrepreneurship journey. So let’s talk about shutting down companies. When about 95% of startups fail everyone should be more educated on what is necessary when beating the odds doesn’t happen.

* And remember…I’m not your lawyer. Get one. This isn’t legal advice. If you think this is me giving you legal advice you are an idiot.

First Things First. Take Care of Yourself.

Shutting down a startup can have many personal impacts, spanning emotional, financial, professional, and even social dimensions. Before we talk about the actual logistics of shutting down a startup let’s talk about how your actual day-to-day life will inevitably change. I highly recommend you get a quality therapist to help you during this time…and it’s probably a good idea to not make too many other changes in your life at once. A lot of change will only make the fear and anxiety you feel at least 10x worse.

Emotional and Psychological Impacts

There will be serious emotional and psychological impacts that can take weeks, months, or even years to recover from. Everyone will deal with these impacts differently, but give yourself the space and grace to grieve. It’s okay to cry. It’s okay to scream into the abyss. Do whatever you need to feel better. But do so in a healthy way that doesn’t end up making your life worse when all is said and done.

Sense of Loss: Your startup is a venture you’ve likely poured significant time, energy, and passion into. Shutting it down can feel like losing a part of yourself. It was your baby. It will take time to get over the loss of a big part of your life. Don’t operate on anyone else’s timeline but your own.

Guilt or Shame: You might feel guilt over letting down employees, investors, or even yourself. These are normal feels. But they are not representative of you as a person. Remember that.

Fear and Anxiety: Concerns about future employability, financial repercussions, or potential legal issues can lead to anxiety. Take a looooot of deep breaths. If you don’t have great coping mechanisms in times of stress now would be a great time to learn them.

Relief: On the flip side, if the startup was causing significant stress or unhappiness, closing might bring a sense of relief. You are getting your future back. You can move on. You can open new doors. You can start a new life’s journey.

Burnout: The culmination of long hours and constant challenges might leave you feeling exhausted and needing a significant break. Please, for the love of G-d try to take a vacation if you can once you have made the decision to shut down. You’re going to need a lot of energy for this process.

Financial Impacts

I’m not gonna lie. There are financial impacts of shutting down. Impacts that can really cause a lot of problems if you’re not careful. Chances are you have fiduciary duties to your company and shareholders.

Personal Liability: If you've provided personal guarantees for any business debts or obligations, creditors can go after your personal assets to recover their dues. Protect your assets. Speak to a lawyer about what you can do to protect the assets you have immediately if you think you may be personally liable for anything surrounding your startup.

Lost Investment: You may have invested your own savings into the startup and may not recoup this amount. Figure out what losses (if any) you can count on your taxes in the coming years.

Impact on Credit Score: If the business defaults on any debts that you’re personally liable for, it could negatively impact your personal credit score. Might not be a great time to look for a home or car…

Professional Impacts

Reputation: Depending on how the shutdown is managed, there might be a reputational risk. It's essential to handle all matters ethically and transparently. It’s okay to talk openly and honestly about the company’s failures. Remember that most tech entrepreneurs that we lionize now have had multiple failed companies. Talk to your shareholders and employees honestly and openly. Take responsibility for mistakes and don’t burn bridges.

Network Strain: Relationships with co-founders, employees, and investors might be tested, especially if there are disagreements on how to proceed. If you’re having co-founder disagreements you may also need to mourn the loss of friendships.

Future Ventures: While many in the startup community understand that failure is a part of the entrepreneurial journey, some potential investors or partners might be wary depending on the reasons for the shutdown. The more efficiently and transparently you handle this dissolution the stronger your chances are for future investments.

Skills and Experience: On a positive note, the experience of running a startup, even one that didn't succeed, can be invaluable. Many entrepreneurs cite their failures as crucial learning experiences that inform their future successes. Do a post-mortem and dive deep into what worked, what didn’t work…and most importantly, what you learned.

Social Impacts

When I shut down my own company I was shocked by how quickly my professional life changed. I had a different social life. I was no longer going to “founder” events. I wasn’t sure where I fit in within the tech ecosystem any longer. You’ll have significant changes that are unexpected at every turn.

Changing Social Circles: Your social interactions might change, especially if they were intertwined with your startup community. It’s time to get hobbies. Do things you enjoyed before you were a founder.

Remember - most tech industry friendships are actually fair weather. They are are your friend when the money, clout, and hype is flowing…but they will abandon you as soon as times get tough. Don’t take it personally.

Family and Personal Relationships: These can be strained due to the stresses of shutting down, especially if significant personal funds were invested or if the venture demanded long hours away from family. Don’t take your loss and frustrations out on your loved ones. It won’t feel good in the light of day for anyone.

Legal Implications: Depending on how the startup is shut down, there might be legal implications, especially if all obligations (like employee salaries, vendor payments, or investor commitments) are not met. Get a lawyer involved for the dissolution ASAP.

Time and Opportunity Costs: Think about the time you dedicated to the startup and other opportunities you might have forgone. This isn't necessarily a "loss," but rather an investment in your entrepreneurial journey. “Onwards and upwards” is my family’s motto. It can be yours too.

Like I said earlier, it's so crucial to seek support during this period, whether from mentors, therapists, supportive friends, or family. Many entrepreneurs face the challenge of closing a startup at some point in their career and go on to find success in future ventures. Remember, every experience, whether positive or negative, contributes to your growth and learning. Just because this idea didn’t work out doesn’t mean all your other ideas will go up in flames.

Soooooo…what’s next?

When folks reach out to me about shutting down their company these are usually the questions I get asked.

Should I Shut Down My Company?

Honestly, if you are even asking this question…the answer is probably yes. In fact, most likely if you’re asking this question you should have started shutting down your company six months ago.

I tell folks that you want to try to shut the company down when there’s still some money in the bank so you don’t end up getting stuck personally with additional expenses. It also allows you to start moving on with your life which can be a priceless gift.

What Do I Need to Do to Shut Down My Company?

Ok, so breaking down this question is kind of nebulous because not every company is set up the same. Not every startup is in Delaware. Not every company has venture firms as investors so we will go over some pretty broad strokes that apply to most folks.

There is also an awesome new startup in the space that is dedicated to helping founders dissolve their companies in a quick and easy way. This isn’t an ad. This is me just excited that more tools are becoming available for folks who need help with this process.

Sunset also has written a great blog post on what they do and how they do it that everyone struggling with this topic should read.

If you read all of this and think you could use their services I would highly recommend reaching out to them. I’ve been super impressed with the team and their processes. It’s a great alternative for startups that are dissolving with money still in the bank.

But, that being said…here are essentially the steps you’ll need to take to dissolve your startup.

1. Consult with Legal Counsel and Financial Advisors: Before making any moves, it's crucial to talk to a legal counsel familiar with Delaware (or whichever state you incorporated in and/or operate in) corporate law, and startup financial structures. They will help guide you through the complexities of winding down a startup with outstanding SAFEs and/or convertible notes. TALK TO A LAWYER BEFORE YOU DO ANYTHING. STUPID MISTAKES CAN COST YOU LATER IN THIS PROCESS.

2. Board and Stockholder Approval: Depending on your company's governance documents and bylaws, you may need to secure approval from the company's board of directors and possibly stockholders before moving forward. Get this approval and signatures early and while everyone is on the same page…and hopefully before internal and external communications have broken down to a point of no return.

3. Notice to Stakeholders:

   • Notify SAFE and convertible note holders. They will likely have rights in the event of a shutdown or liquidation. Discuss with your legal counsel the best way to handle these financial instruments, including any potential repayments or conversions.

   • Inform employees, clients, suppliers, and other stakeholders. Give notice to employees in compliance with applicable laws. If possible, try to give at least some severance to employees who took a massive risk to be a part of your startup. They’ll most definitely appreciate it and it will go far. Also, make sure you have properly paid everyone and that nobody is owed back pay. State agencies will check this and underpayment can be a reason for states to not allow dissolution. Also, make sure all employees and shareholders return all company property that they may hold - this includes phones, laptops, files, and all that jazz.

   • Inform all states and government agencies you deal with so that you don’t later have issues with things like unemployment insurance as you’re wrapping up.

4. Terminate any Remaining Contracts and Agreements: This includes leases, service contracts, subscriptions, etc. Some may have early termination fees or requirements for notice.

5. Liquidate Assets:

   • Sell anything and everything that you can. Try to find a buyer for any IP or physical assets that are held by the company.

6. Resolve Outstanding Liabilities:

   • Pay off any debts or obligations to the extent possible.

   • Depending on how your SAFEs and convertible notes are structured, you may owe certain amounts or have specific obligations to your note holders upon winding down. Consult with your counsel on this matter.

7. Asset Distribution: Any remaining assets (including IP, for which you may be required to seek a third-party valuation for) after the settlement of liabilities would be distributed to equity holders as outlined in your company's organizational documents. Often, this distribution occurs according to a predetermined hierarchy (e.g., preferred shareholders first, then common shareholders).

8. Handle Final Tax Obligations: File any final federal, state, and local tax returns. This includes employee-related taxes and potential sales or use taxes.

9. File with the Delaware Secretary of State: You'll need to file a Certificate of Dissolution or a similar document to formally shut down the company in Delaware (or again whatever state you’re dealing with.) There might be final franchise taxes and fees due. Make sure all state and federal tax returns are filed before filing

   State Dissolution Process: You may still need to go through an additional formal dissolution process for your business entity as required by the state within you operate. This process often includes notifying creditors, settling debts, and liquidating business assets.

10. Close Business Accounts and Credit Lines: Ensure that all business bank accounts, credit cards, and lines of credit are closed after all debts and obligations are settled.

11. Retain Records: Even after the dissolution, you should retain business records for a certain period as required by law. This includes financial records, employment records, tax filings, etc.

12. Monitor any Post-Dissolution Obligations: Sometimes, even after dissolution, there might be obligations or issues that come up. Stay in touch with your legal counsel to ensure any post-dissolution issues are addressed.

13. Personal Considerations: Finally, consider your own personal financial and tax implications, especially if you personally guaranteed any company debts or made significant capital contributions.

If My Startup Has Unpaid Debts Upon Dissolution Do I Need to File for Bankruptcy?

Okay, so let me just say that it’s probably not good to leave unpaid debts sitting out there in the ether. But bankruptcy filing and the procedures associated with it are no joke either. If you have unpaid debts you’ll want to prevent as little long-term impact as possible so filing for bankruptcy might be your best option.

Make sure you speak with your legal and shareholders about these options, but here are some things that happen if you dissolve your startup and don’t pay your outstanding debts.

So what are these risks?

Personal Liability:

• Sole Proprietorship: If you run a sole proprietorship, you and the business are the same legal entity. This means you are personally responsible for all of the business's debts. Creditors can go after your personal assets to satisfy the debts of the business.

• Partnerships: In a general partnership, all partners are typically personally liable for the business debts. If one partner can't cover their share, creditors might pursue the other partners.

• Corporations & LLCs: These structures generally provide owners with limited liability, meaning the personal assets of shareholders or members are protected from business creditors. However, this protection can be lost (called "piercing the corporate veil") if the company didn't operate as a separate entity or if there was fraud or other improper conduct.

Lawsuits by Creditors: Creditors may sue the business to recover their money. If they obtain a judgment, they can potentially seize business assets or use other legal means to get paid. I’m pretending that nobody out there was doing crime. Please, don’t do crime.

Liens: Creditors might place liens on the business's property. This means that if you sell the property, the creditor gets paid from the proceeds before you do.

Debt Collection: Creditors can employ debt collection agencies to recover their money. This can result in frequent contact and potential harassment from these agencies.

Tax Implications: If a creditor forgives or writes off the debt, it might be considered taxable income. It's essential to consult with a tax professional on this matter.

Personal Guarantees: If you've provided personal guarantees for any of the business's debts, creditors can pursue your personal assets even if the business is a separate legal entity.

Ongoing Liability: Without the protection of bankruptcy, which can discharge certain debts, you or the business remain liable for those debts. Creditors can pursue payment for years, depending on the statute of limitations in your jurisdiction.

Reputation: Unpaid debts can damage your professional reputation, which might affect future entrepreneurial endeavors or other business opportunities.

I think bankruptcy dramatically reduces the risks after a dissolution…but talk to your legal counsel and see what they think before you jump into anything.

Hope this helped y’all! Please feel free to share with everyone and anyone who might be struggling with what to do in this situation. As always, I’m happy to lend an ear as someone who has been in this situation already. See y’all next week!

xoxo

Stevie