Arlan Hamilton, managing partner and founder of Backstage Capital, said during her "Your First Million" show that the company has reduced its staff from 12 to three.

After narrowing its investment strategy to only participate in follow-on rounds of existing portfolios, Backstage Capital laid off workers. The workforce reduction shows that the venture capital firm is having a hard time growing.

If systems were different, this could have been avoided, according to Hamilton.

Hamilton did not reply to the email.

The company said in March that it would no longer make new investments. Hamilton said at the time that there would be people who take this negatively or will take this as us not being active.

It is rare for a firm to say they are growing assets while declining to make new investments, especially since they had fresh capital from Comcast. There is a general slowdown at the firm because Backstage doesn't have much dry powder left.

The changes have taken a toll, according to Hamilton. She said she had been burned out for three years.

Hamilton said that Backstage is in a "purgatory kind of position" because some investors think it has all the support it needs. That may not be the case. The fund was too far along to invest in according to Apple and JP Morgan.

It's difficult to close shop on new investments, bring more assets under management, and bring more follow-on investments if you don't have more support.

She said someone asked why she didn't have more under management. I never hear from these people again after I asked them how they could be helpful.

There needs to be more responsibility for where and to whom the money is spent. It could be a big deal for firms like Hamilton, which focus on funding overlooked founders. The domino disparity effect is caused by the lack of support from the top of the VC food chain.

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Hamilton said that she plans to grow Backstage's assets to over 100 million dollars. Hamilton told them to look at some of the funds she has invested in as potential investors because the firm doesn't have dry powder.

Over the last six years, Backstage Capital has invested in more than 200 companies and landed more than $20 million in assets. Runner, founded by Hamilton, raised over 1.5 million dollars from a wide range of investors.

The general partners are still on staff for the main fund. Hamilton said that they are working on a project that will be made public soon.

Dominic Madori-Davis can be reached at dominic.Davis@techcrunch or by e-mail at

Startups keep laying off swaths of employees as the downturn continues