Vic govt cancels 500 Startups deal
Kate Cornick: Could no longer trust 500 Startups without Rachael Neumann as its Australian lead
The Victorian government has sensationally pulled nearly $3 million in funding from global accelerator 500 Startups after more than a month of negotiations that followed revelations of sexual harassment allegations against founder Dave McClure.
The move from the government's $60 million innovation fund LaunchVic to terminate the funding came after 500 Melbourne lead Rachael Neumann resigned from the organisation.
LaunchVic chief executive Kate Cornick said the government no longer held trust in the organisation without her.
"We don’t believe that 500 Startups will be able to build a strong and inclusive culture and the social capital it needs to be able to successfully roll out its accelerator program in Victoria," Ms Cornick said.
"While I am deeply disappointed at how this has ended, I feel confident in LaunchVic’s strong course of action over the past month to give 500 Startups an opportunity to show leadership to improve culture in the startup sector and fix the issues at hand," she said.
"Unfortunately, as we’ve expressed to 500 Startups, that without Rachael Neumann at the helm we don’t believe it will work."
Ms Neumann said she made the decision to resign following meetings with the 500 Startups team in Silicon Valley this month.
"I determined that this is simply not the right time for 500 to launch in Australia and so I have resigned from the 500 team," Ms Neumann said.
"I still believe there that there is a gap in the local ecosystem that needs to be addressed in order to get Australian startups access to other global communities and best practices," she said.
"I’m grateful for all the support that I have received over the last few weeks and hope to serve the community in another capacity going forward."
Due to Ms Neumann’s resignation, Ms Cornick said LaunchVic did not believe that "anyone of her calibre" would want to take on the role, and made the decision this week to pull the funding.
The funding, which came through the state government’s $60 million innovation fund LaunchVic in March, was for 500 Startups to run a local version of its accelerator program in Melbourne.
Ms Cornick said 500 Startups had not received any of the taxpayers’ funding yet and "no public funds are at risk".
The program was officially launched in June by 500 Startups founder and public figurehead Dave McClure, who was a guest of the Victorian government.
But just days later it was revealed that Mr McClure had been quietly sidelined from 500 Startups’ "day-to-day" operations months ago due to his "inappropriate interactions with women in the tech community".
The Victorian government and LaunchVic had not been informed about the allegations made against Mr McClure, or that he had been sidelined,until they were published in the media.
But the government persisted with the funding commitment, with LaunchVic first putting 500 Startups "on notice", and then "pausing" the local 500 Melbourne program until a new set of KPIs focusing on diversity were establishment.
Applications for the 500 Melbourne program remained opened during this pause, and the 500 Melbourne website still maintained the 500 Startups team would arrive in Melbourne in October, the original schedule for the program.
But these efforts were unsuccessful, with LaunchVic announcing on Thursday that the funding has now been officially pulled, more than a month after the revelations first came to light.
Ms Cornick said LaunchVic would reinvest the near-$3 million in the next funding round of funding, which would focus on "world-class accelerator programs".
"Of the grant funding we have allocated to date, 70 per cent has been invested in local home-grown programs, and we will continue to invest at a local and a global level to drive outcomes that will position Victoria’s startup ecosystem as a leader," she said.
"I'd like to thank the Australian startup ecosystem - many of who have publicly advocated for us and given us the space required to make the right decision."
The government’s decision to initially continuing funding the organisation despite its deceptions was heavily criticised by many members of the local tech and startup communities.
The decision places further pressure on embattled Victorian innovation minister Philip Dalidakis, who initially stood by the funding decision.
"Our deal was with 500, not one man," Mr Dalidakis said in July.
Even last week it seemed LaunchVic intended for the 500 Melbourne program to go ahead, with a spokesperson saying that a "remedial plan" was being drawn up.
"The start of the 500 Melbourne program is postponed until we are confident that 500 Startups can rebuild the trust of the Australian startup community," the spokesperson said.
Ms Cornick said the decision was made independently by LaunchVic.
"LaunchVic is an independent company and the decision today was a result of the LaunchVic board’s decision. I went down to visit the Minister and let him know personally this was our decision that we are taking," she said.
The Victorian government’s decision continues the global backlash against the once esteemed startup organisation.
500 Canada, a venture capital fund run in partnership with 500 Startups, was recently canned after an investor revolt following Mr McClure’s behaviour.