LaunchVic has terminated its partnership with the Australian arm of Silicon Valley startup accelerator and VC firm 500 Startups, following the resignation of local managing director Rachael Neumann.
The Victorian government's AU$60 million technology investment body said that without "trusted local leadership", it does not believe 500 Startups will be able to build "a strong and inclusive culture, and the social capital it needs" to be able to successfully deliver its program in Melbourne.
"Unfortunately, as we've expressed to 500 Startups, that without Rachael Neumann at the helm we don't believe it will work," Dr Kate Cornick, CEO at LaunchVic, said in a statement.
Neumann told ZDNet that she resigned from 500 Melbourne because it was unclear during her recent time at headquarters whether the local program would be set up for success.
"When I accepted the role to head up 500 Melbourne, I believed that the program would be able to offer local founders and the wider community really great opportunities to grow and thrive at a global level. It was important to me to have that same level of confidence that I had when I accepted the role -- given everything that has transcribed -- that I would get the support necessary," Neumann told ZDNet on Thursday.
"500 Startups has a lot on their plate right now with many competing priorities ... So I thought it would be best not to go ahead with the launch [of the local program] at this time and I stepped down from the team."
The accelerator's co-founder and frontman Dave McClure handed in his resignation early July after being outed by whistleblowers for sexual misconduct towards a number of women in professional settings.
After conducting an internal investigation, 500 Startups confirmed last month that McClure had made inappropriate sexual advances towards women over a number of years.
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 terminating its support for 500 Startups unless major cultural changes are made.
Cornick said in July she 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 at the time.
The state government-backed organisation had committed between AU$2 million and AU$3 million to support the launch of 500 Melbourne. Both Cornick and Neumann assured that the taxpayer funds allocated to 500 Melbourne remains secure in LaunchVic's bank.
Cornick said the funds would be reinvested into another "world-class" accelerator program with the continued aim of building capability and expertise in the state's startup ecosystem.
500 Melbourne was only at the stage of accepting applications from local startups; the program had not yet commenced.
"We will surely communicate to those applicants that the program is not going forward and refer them to other options in the local ecosystem," Neumann said.
Neumann admitted she has not yet decided what's next for her.
"I remain committed to working to improve our local ecosystem and put Australia on the map globally but at what capacity is yet to be determined," she said.
The Australian startup community 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.
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.
Cornick thanked the Australian startup ecosystem for giving LaunchVic "the space required to make the right decision."