- Joi Ito/Flickr
Startup incubator 500 Startups has suspended one of its funds after founder Dave McClure admitted to being “a creep” towards female founders.
According to BetaKit, the company’s Canada arm has suspended its startup fund after investors expressed concerns that McClure would be involved.
500 Canada had managed to get $25 million (£15.2 million) in imminent funding commitments from local institutional LPs. But all of those LPs made those commitments conditional on McClure not receiving a dime in profit from the fund.
500 Canada had a profit-sharing setup with 500 Startups, with McClure sitting on the Canadian arm’s investment committee and board. The LPs pushed for a renegotiation of this relationship, according to BetaKit’s sources, but the two entities couldn’t reach an agreement in time. Eventually, 500 Canada decided to disband the fund.
The Globe and Mail obtained the letter sent by 500 Canada’s managing partners. It said: “Although we are very proud of what we have accomplished together we regret that we will not be able to continue this exciting journey in its original form.”
The saga is part of the continuing fallout from a number of female founders coming forward to allege harassment by McClure. Proday CEO Sarah Kunst told the New York Times last month that McClure had messaged her: “I was getting confused figuring out whether to hire you or hit on you.” That story inspired Cheryl Yeoh, a Malaysian entrepreneur, to share her own story of alleged sexual assault by McClure.
The revelations sent 500 Startups spinning. In a response article to the New York Times, 500 Startups’ cofounder Christine Tsai revealed she had taken over as CEO a few months earlier, and that McClure was no longer involved in day-to-day operations. The company hadn’t disclosed this publicly and was forced to apologise to its Australian partner, Launchvic, for keeping it in the dark.
McClure initially apologised for being “a creep”, then resigned his position as general partner. Another partner, Elisabeth Yin, quit over 500 Startups’ handling of the issue, accusing the company of “mistruths”.
500 Startups also has a UK operation, which has so far publicly reported taking in six startups as part of its three-month “Distro Dojo” programme.
Earlier this month, UK venture partner Matt Lerner told Business Insider that McClure’s revelations hadn’t affected the UK operation. The company hasn’t responded to an updated request for comment.