The CEO of NPM, a startup that provides a crucial service for 11 million developers, told employees that it's secured a deal that removes 'the threat of running out of money' until early 2020
- On June 7, NPM CEO Bryan Bogensberger told employees in an internal Slack message that the company had reached a deal with its board of directors to provide enough funding to take it through at least the first quarter of 2020.
- He also implied that NPM had faced the possibility of running out of money, saying: "This is absolutely the best of both worlds because we can run a proper raise process without the threat of running out of money and with the full support of the board."
- This look into NPM's financial situation comes about a month after 17 employees wrote an internal letter demanding better working conditions and criticizing management's lack of financial transparency, in the wake of a controversial layoff at the company.
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Bogensberger told employees in an internal Slack message on June 7 that the company has until the end of July to take the offer. In the interim, he said, NPM leadership is being encouraged by the board to continue the fundraising process with outside investors. He also implied that NPM had faced risks of running out of money.
"This is absolutely the best of both worlds because we can run a proper raise process without the threat of running out of money and with the full support of the board," Bogensberger wrote to employees.
NPM's board of directors includes investors in the company like Ethan Kurzweil of Bessemer Venture Partners, Puneet Agarwal of True Ventures, and Jevon MacDonald of Manifold.co, according to Pitchbook and LinkedIn. All told, NPM has raised $18.93 million in venture capital funding to date.
However, NPM has struggled with raising venture capital in the recent past, according to people familiar with the situation, because its business model had yet to find solid footing. NPM has long offered a free tier of its popular service to individual developers and small teams, but recently started focusing on selling a premium product called NPM Enterprise to larger customers to drive revenue.
In his message, Bogensberger asked employees to focus on delivering features that would help it land more business deals.
"Every additional customer and partner increases the value of the company which means increases the value of your stock options," Bogensberger wrote. You can read the full message below.
NPM is under scrutiny
This look into NPM's financial situation comes as the company comes under scrutiny for its corporate culture and treatment of employees. Recently, the Register reported that NPM's handling of the layoff of 5 employees in March rubbed some employees the wrong way.
In the wake of the controversy around those layoffs, NPM published an apology - signed by Bogensberger, as well as NPM co-founders Isaac Schlueter and Laurie Voss - saying that the company was undergoing growing pains as it worked on transitioning away from its reliance on venture capital and towards a more sustainable business model.
Then, in May, 17 NPM employees signed a letter, circulated internally, demanding better working conditions and increased transparency into the company's financial health.
"This trend shows no sign of slowing following a continued lack of transparency into the financial health of the company, the deletion of the employee handbook, the lack of cost-of-living raises, and the lack of accountability in the treatment of remaining staff," said the open letter.
In May, around the same time as the letter was published, GitHub - a subsidiary of Microsoft - launched its own rival product to NPM's popular free tools.
Most recently, the Register reported that NPM plans to fight claims from former employees to the National Labor Relations Board that management retaliated against them after they tried to start a union.
NPM did not respond to a request for comment.
Read Bogensberger's full message to employees below:
After many, many discussions with the board (our main investors) we received a term sheet from them today that funds us through to Q1 2020! We have until the end of July to take this offer and we are being encouraged to continue this raise process to see what the outside world is willing to offer up. This is absolutely the best of both worlds because we can run a proper raise process without the threat of running out of money and with the full support of the board.
In support of this effort I ask you all to focus on feature delivery to support sales and partnerships. Every additional customer and partner increases the value of the company which means increases the value of your stock options. If you have questions about how you can add value to this process please ask. I will keep you informed of the progress with outside investors over the coming weeks.
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