500 Startups put ‘on notice’ in Vic

James Riley
Editorial Director

The Victorian government has put 500 Startups “on notice’ but stopped short of pulling its funding for the world-renowned accelerator following sexual harassment allegations against its founder Dave McClure.

Following publication of a New York Times expose on sexism and harassment in Silicon Valley, it was revealed that Mr McClure had been stood down from day-to-day operations at 500 Startups due to “inappropriate interactions with women in the tech community”.

500 Startups received more than $2.5 million in funding commitments from LaunchVic in March to run a local program in Melbourne, and Mr McClure was paraded as the public face of the organisation at the launch two weeks ago.

Kate Cornick: ‘It is unacceptable’ but 500 Startups will keep its $2.5 million – for the time being

But the Victorian government and LaunchVic were not informed by 500 Startups of Mr McClure’s behaviour or his removal from the company’s operations months prior.

Following a crisis discussions with new 500 Startups’ chief executive Christine Tsai on Monday, LaunchVic CEO Kate Cornick says the US organisation is now “on notice”.

“It is unacceptable 500 Startups hadn’t reported these issues to us, and that Dave McClure was allowed to travel to Australia to represent 500 Startups,” Ms Cornick said.

“The 500 Startups management team has expressed deep regret that they allowed Dave McClure to participate in the program of events associated with the launch of the Australian program.”

But the government funding for the 500 Melbourne program will remain for the time being.

“500 Startups’ program is supported by more than 100 skilled members of staff. While Dave McClure was a figurehead for the company, he is not the reason LaunchVic chose to invest in the program, which will see international capability brought to the state of Victoria,” Ms Cornick said.

“At this stage we believe that 500 Startups will be able to deliver against its contract with LaunchVic with Rachael Neumann at the helm. Rachael is well known to LaunchVic, and has long championed diversity issues in the Australian and global startup communities.”

Ms Tsai, who co-founded 500 Startups with Mr McClure, also issued a public apology to LaunchVic and the Victorian government on Monday, and reaffirmed that they were not informed of his actions.

“We regret the decision to have Dave participate in the program launch and the impact it has had on everyone who so publicly supported us up until this point,” Ms Tsai said.

“During these events, we held Dave up to the community as a hero. And while most heroes are actually human, Dave has made mistakes that are inexcusable and completely against everything that 500 stands for and works towards.”

“While we faltered in this instance, we do not intend to fail. We will continue to serve our mission with the wisdom gained from our mistakes. With the LaunchVic partnership, we’re confident that together we will build a strong startup acceleration program that will provide great value to Australian entrepreneurs as well as help nurture the local startup community.”

The New York Times article detailed a number of sexual harassment claims made against prominent members of the Silicon Valley tech community.

In the article, 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 incident to a colleague of Mr McClure, Ms Kunst said 500 Startups ended negotiations with her.

Only after the article was published did 500 Startups reveal that Mr McClure had stood down from day to day operations “a few months ago” due to his “inappropriate interactions with women in the tech community”.

A day after the story was published, Mr McClure issued a statement apologising for his actions.

“It’s clear that some of my past actions have hurt or offended several women. And I probably deserve to be called a creep. I made multiple advances towards multiple women in work-related situations, where it was clearly inappropriate,” Mr McClure wrote in a Medium post.

I put people in compromising and inappropriate situations, and I selfishly took advantage of those situations where I should have known better. My behaviour was inexcusable and wrong.”

Victorian innovation minister Philip Dalidakis quickly slammed the tech figurehead and moved to distance the government from him.

“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,” Mr Dalidakis said.

Rachel Neumann, who is leading the 500 Melbourne program, also took to Twitter to comment on the controversy.

“I can assure you that this comes as a shock to me, LaunchVic, Philip Dalidakis and everyone involved in bringing 500 to Melbourne. This behaviour needs to be stamped out of our community. I’m going to do everything in my power to aggressively be part of the solution,” Ms Neumann said.

“500 is so much bigger than one person, and I know we will continue this important work with even more fervour, intention and consultation.”

Mr McClure has a strong presence in Australia, and has invested in a number of local tech companies, including Canva and UpGuard.

Mr McClure is the public face of 500 Startups, and the organisation is an investor in Australian venture capital fund Blackbird Ventures.

Blackbird founder Niki Scevak has also slammed Mr McClure following the revelations.

“We’ve known Dave and the crew at 500 Startups for a long time and count them as friends. So we were very disappointed to read the NY Times article about Dave’s unacceptable behaviour. Like everyone else we read it for the first time in NY Times on the weekend,” Mr Scevak told InnovationAus.com.

“We’re pleased to see that Dave has taken responsibility for his bad behaviour and this morning published a blog apologising for it. We hope that he can change his ways and move on from this in a way that’s constructive for the startup community and himself.

“At Blackbird we’ve really focused on gender diversity and promoting women in tech, startups and VC. We will continue to do this and redouble our efforts.”

Blackbird Ventures partner Samantha Wong added that she is available to talk to anyone portfolio companies or Startmate participates about this issue and their experiences.

“I would like to encourage people to come forward and talk to me if they feel like anything has happened in our community at Blackbird and Startmate. We’re definitely reinvigorated to take even stronger action on the back of this,” Ms Wong told InnovationAus.com.

Do you know more? Contact James Riley via Email.

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