500 Startup's co-founder and frontman Dave McClure handed in his resignation on Monday after being outed by whistleblowers for sexual misconduct towards a number of women in professional settings.
After conducting an internal investigation, the Silicon Valley-based startup accelerator and investment fund confirmed McClure had made inappropriate sexual advances towards women over a number of years.
500 Startups has since apologised to LaunchVic, which hosted McClure's recent trip to Victoria and invested AU$3 million into the Melbourne arm of his accelerator, as well as to Victorian Minister for Small Business, Innovation and Trade Philip Dalidakis, who welcomed the opening of 500 Melbourne two weeks ago.
"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," Christine Tsai, McClure's co-founder who is taking over as CEO at 500 Startups, wrote in a blog post.
LaunchVic confirmed it was not aware that an internal investigation was being conducted into McClure's behaviour until it became public knowledge via a New York Times article, and threatened the possibility of pulling its support for 500 Startups unless major cultural changes are made.
Kate Cornick, CEO of LaunchVic, told ZDNet that the organisation has no tolerance for workplace harassment and was "concerned for the women involved and for the courage it took to speak up on this issue."
"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," Cornick said.
Moving forward, LaunchVic said it is expecting 500 Startups to take "a leadership role for female entrepreneurship while also becoming champions of change on harassment."
"While it should never have come to this, the last two days have shone a light on a significant and systemic issue. We are hoping that from here we can build a stronger, healthier, and more diverse and supportive ecosystem -- there's a lot of work to do," Cornick told ZDNet.
"We are expecting 500 Startups to make a genuine impact and address these issues at both a global and local level."
While McClure was the face of 500 Startups, LaunchVic said his prominence in Silicon Valley was not the reason it chose to invest in the local arm of the accelerator program.
"At this stage we believe that 500 Melbourne 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," LaunchVic said in a statement.
The accelerator also apologised to the Australian startup community, who collectively condemned McClure's actions in an open statement penned by Annie Parker, who co-founded Telstra's startup accelerator Muru-D, but departed earlier this year to focus her energy on establishing the new startup hub Lighthouse.
The statement was supported by more than 100 members of the startup community.
Communicating a similar sentiment to Cornick, Parker said these "disturbing" accounts give the Australian startup community an opportunity to take "a long hard look at the ecosystem".
"The Australian technology community is a warm and welcoming one, which is increasingly diverse. We have a long way to go though, and having a zero-tolerance policy to gendered harassment is critical to our future. We all have a role to play in fixing this," Parker wrote.
"We want to commend the women in Silicon Valley who have come forward including Susan [Wu], Gesche Haas, Sarah Kunst, Lindsay Meyer, Rachel Renock, Wendy Dent, and Lisa Curtis. We also want to thank the Australian women who have come forward about sexual harassment over the weekend and who will in the future."
McClure penned a blog post admitting and apologising for his behaviour.
"I made advances towards multiple women in work-related situations, where it was clearly inappropriate. I put people in compromising and inappropriate situations, and I selfishly took advantage of those situations where I should have known better. My behavior was inexcusable and wrong," McClure wrote.
"I'm ashamed I didn't change my behavior until I was forced to do so by circumstance and by others. The reality is, I was stopped from further bad actions by those who spoke up about my offenses, at substantial risk to their personal and professional reputations ... and subsequently, by Christine and others on the 500 team."
McClure said he started "regular counseling sessions" one month ago to address his self-proclaimed "shitty behaviour" and "poor judgement", though insisted that 500 Startups was not aware of his behaviour until "a few days ago".
Through 500 Startups, McClure is an investor in a number of Australian startups including Canva, HappyCo, and UpGuard, and recently visited Canva's Sydney office while in Australia for the launch of 500 Melbourne.
500 Startups declined to make any further comments.
McClure is not the only one to come under the spotlight for sexist behaviour.
Co-founder of Uber Travis Kalanick's recent decision to step down as the company's chief
followed a meeting between Uber directors that recommended a radical set of changes at the company, including eradicating sexism, removing party-first practices, and reducing Kalanick's responsibilities as CEO.
The meeting also reportedly included discussions over allegations of sexual harassment, and saw the resignation of board member David Bonderman, who made a sexist remark at a previous meeting that involved fellow board member Arianna Huffington and was called to prevent such behaviour taking place in the future.