Victorian innovation minister Philip Dalidakis has described the 500 Startups sexual harassment scandal and the month long funding debacle that followed as “a small setback.”
LaunchVic’s said on Thursday it would terminate its $3 million funding contract with 500 Startups. It maintains the decision was made independently of the Minister’s office following the resignation of 500’s Australia chief Rachael Neumann.
500 Startups was given a $2.9 million funding commitment in March to run a local version of its accelerator program – 500 Melbourne – later this year.
Mr Dalidakis said the decision was made by the LaunchVic board, and that he supports it.
“In Ms Neumann’s opinion, 500 Startups needs to focus on its operations in San Francisco and will not have the necessary resources to help 500 Melbourne meet the criteria set for it,” Mr Dalidakis said in a statement. “As such, LaunchVic will terminate its funding agreement with 500 Startups.”
“As we did when LaunchVic recommended we fund 500 and when LaunchVic recommended we pause the funding, we have accepted the recommendation to terminate.”
Mr Dalidakis said he was only informed of the decision to terminate the funding on Thursday morning, hours before it was announced publicly.
“Obviously this is not the outcome we had hoped for when we made the agreement, but we trust the board and CEO of LaunchVic and will continue to listen to their advice,”. This development will not deter us from bringing globally connected programs to Victoria and working hard to grow our startup ecosystem,” Mr Dalidakis said.
“This is a small setback but our robust ecosystem is not dependent on any one organisation and we will get back up, dust ourselves off and keep going.”
It comes after last month’s revelations that 500 Startups founder Dave McClure was facing a series of sexual harassment allegations made against him by a number of women, and after he had been stood down from the organisation’s day-to-day operations earlier in the year.
Despite 500 Startups not informing LaunchVic or the Victorian government of the allegations and the organisation sending Mr McClure to Melbourne for the launch of the local program after he had been quietly sidelined, its funding was kept in place following the revelations.
It was publicly embarrassing for Mr Dalidakis, who brought Mr McClure to Melbourne as a guest of the government and posed for several photos with him at the launch of the local program in June.
LaunchVic at first put 500 Startups “on notice” and eventually “paused” the local program – despite allowing it to continue to accept applications to the program, and the keeping its existing public timetable of October for the program.
But LaunchVic CEO Kate Cornick said that after Ms Neumann announced her intentions to resign, the organisation’s board decided to finally terminate the funding.
Mr Dalidakis himself had also initially backed 500 Startups, saying the program is bigger than just Mr McClure.
“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 last month.
Ms Cornick also ran with the same line of argument following the initial fallout.
“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 last month.
But the 500 Startups’ program is apparently not bigger than its Australian lead Rachael Neumann. Once Ms Neumann resigned, the decision was made to abandon ship.
The $2.9 million that was to have gone to 500 Startups will now be reinvested in a round of funding for “world-class accelerator programs”.
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