500 Startups is a shocking model

James Riley
Editorial Director

When 500 Startups founder Dave McClure visited Melbourne last month as a guest of the Victorian government he had already been stood down from the “day-to-day operations” of the world-renowned organisation due to a series of sexual harassment claims against him, it has been revealed.

500 Startups received more than $2.5 million in funding from the state government in March to run the program in Melbourne, which was officially launched last month. Mr McClure, who is the public face of the organisation attended the 500 Melbourne launch.

By then, the prominent tech investor had already been quietly sidelined from most of 500 Startup’s operations due to his “inappropriate interactions with women in the tech community”, a New York Times story has revealed.

Dalidakis and McClure: Surely this is the end for the $2.5 million 500 Startups subsidy

Victoria’s Innovation Minister Philip Dalidakis said his government had not been made aware of any of the allegations made against Mr McClure, nor that he had already been reprimanded by his company for this by the time he visited Melbourne.

Mr Dalidakis issued a statement on Twitter denouncing Mr McClure and moving to disassociate the government from him. It is not clear whether the $2.5 million arrangement between the Victorian Government and 500 Startups will survive the controversy.

“Our deal was with 500, not one man. And whilst Dave was the face of 500, he has betrayed all he stood for, including his public condemnation of Trump, who he now shares more in common with than anyone would want,” he said on Twitter.

Mr McClure is also an investor in several Australian tech companies, including Canva, UpGuard and HappyCo.

The New York Times detailed sexism and harassment that women face in Silicon Valley, with many going on the record with allegations against big-name tech investors.

In the story, entrepreneur Sarah Kunst said she had been in discussions with 500 Startups in 2014 for a potential job. During this process, Mr McClure sent her a Facebook message saying: “I was getting confused figuring out whether to hire you or hit on you.”

After mentioning this to one of Mr McClure’s colleagues, Ms Kunst said 500 Startups ended negotiations with her.

According to the New York Times, Mr McClure did not dispute these claims.

In the hours since the story was published, Ms Kunst said that another five women had told her they had “similar or worse experiences with” Mr McClure.

In a statement, new 500 Startups CEO Christine Tsai said Mr McClure had been stood down from day-to-day operations at the organisation “a few months ago”, despite his visit to Melbourne only weeks ago.

“In recent months, we found out that my co-founder Dave McClure had inappropriate interactions with women in the tech community. His behaviour was unacceptable and not reflective of 500’s culture and values. I sincerely apologise for the choices he made and the pain and stress they’ve caused people,” Ms Tsai said in the statement.

“But apologies aren’t enough without meaningful actions and change.”

But the organisation waited months to make the announcement, and continued to parade Mr McClure around the world as the ambassador of the organisation despite the allegations, including in Australia.

500 Startups only released a statement confirming Mr McClure’s reduced role after the New York Times story was published.

Mr McClure is yet to comment on the allegations, apart from retweeting the 500 Startups statement on Saturday.

The organisation said McClure’s role is now limited to “fulfilling his obligations to our investors as a general partner” and that he is also receiving counselling to “work on addressing changes in his previously unacceptable behaviour”.

BlueChilli founder Sebastien Eckersley-Maslin questioned Victoria’s funding of 500 Startups following the revelations about Mr McClure.

“Is this the kind of leadership our governments want to fund and bring to Australia?” he tweeted.

But Mr Dalidakis said any potential personal criticisms against him was missing the main issue.

“As embarrassing as some will make this out to be for me personally, it pales into significance with the terrible ordeal that the many women have experienced directly. And it is them that I am thinking of right now,” he said.

It’s understood the Victorian government will continue its funding of 500 Melbourne, with the local program to be run by former Eventbrite country manager Rachael Neumann.

Melbourne investor and startup advisor Atlanta Daniel said she still supports the local version of 500 Startups, which is being run mostly by women.

“We shouldn’t be holding this government up for someone else’s mistakes. They’ve worked so hard to increase diversity and inclusiveness,” Ms Daniel told InnovationAus.com.

“I think it’s super unfair for people with an agenda to use this to attack them – that’s how we shut down the efforts of the good ones,” she said.

Mr Dalidakis has placed a specific focus on improving gender diversity in the local tech community during his tenure as innovation minister.

And the recent news has reaffirmed how important this is, he said.

“More power to the women speaking up – they are the heroes in this story and the people that need supporting. My campaign for diversity and inclusiveness is more important than ever before, this proves it,” Mr Dalidakis said.

The New York Times story has already made waves in the Australian tech and startup community, with many women taking to social media to share similar harrowing stories and accounts of the harassment and sexism they regularly encounter in the local industry.

“There are people in Australia and in Melbourne who are behaving terribly and they go unnoticed and unaccused,” Ms Daniel said.

“We need to set a standard as a society and that comes from all of us,” she said.

Australian entrepreneur and investor Susan Wu was also included in the New York Times story, with claims that prominent tech investor Chris Sacca “touched her face without her consent in a way that made her uncomfortable” at a conference in 2009.

Following the publication of the article, Mr Sacca sent a statement to the paper saying: “I dispute Susan’s account from 2009.”

Ms Wu wrote a follow-up blog about the issue on Saturday.

“What I experienced did not happen in a vacuum, it happened in an industry that has historically enabled and supported those who have power misusing that power, such that it has become the norm. I am one of many,” Ms Wu wrote.

“If we are going to fix this broken system of objectification, harassment and discrimination in tech, we need as many of us to work together towards a common, shared vision of an improved tech industry as possible.”

Do you know more? Contact James Riley via Email.

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