Dave McClure, co-founder of early-stage venture capital fund 500 Startups, resigned as general partner after complaints by several women about his behavior.
His departure reflects the widening fallout from revelations of sexual misconduct by Silicon Valley investors toward founders. A growing litany of accounts of unwelcome advances is laying bare the power imbalance between mostly male venture capitalists and the entrepreneurs who rely on them to get new businesses off the ground.
On Friday, the New York Times published a report that included a 2014 message sent by McClure to entrepreneur Sarah Kunst. He wrote “I was getting confused figuring out whether to hire you or hit on you,” according to Kunst.
Later Friday, McClure wrote a blog post entitled “I’m a Creep. I’m Sorry.” He said he’d made advances toward multiple women in work situations. McClure is a bombastic figure known for unconventional behavior. His resignation was reported earlier by Axios. On Friday, McClure had stepped down as CEO, but not as general partner of the firm’s many funds.
On Monday, another woman publicly accused him of unwelcome sexual advances. Cheryl Yeoh, a founder whose company had been funded by 500 Startups, was in talks with McClure about collaborating on an accelerator in Southeast Asia, she wrote in a blog post. After a business meeting in 2014 that stretched late into the evening, McClure proposed having sex with Yeoh, according to the post. After she rebuffed him more than once, McClure made yet another entreaty, she said. He “pushed himself onto me to the point where I was backed into a corner, made contact to kiss me,” she wrote. “Disgusted and outraged, I said no firmly again, pushed him away and made sure he out my door.”
McClure did not respond to a phone call and texts sent by Bloomberg News on Monday afternoon seeking comment. A spokeswoman for 500 Startups did address Yeoh’s account.
“We appreciate Cheryl speaking up and realize how upsetting and painful it is for her to have gone through that experience and have the courage to speak up,” the spokeswoman said in an emailed statement. “We can only hope our efforts in changing 500 can help create a safe and effective platform for female founders around the world.”
500 Startups partner Elizabeth Yin also resigned on Monday, saying the venture firm wasn’t forthcoming with employees about the reasons for McClure’s departure, and was slow to separate from him. She didn’t respond to requests for comment.
The firm said in a statement that its management team learned of allegations related to “inappropriate behavior” by McClure and immediately launched an internal investigation that resulted in Christine Tsai replacing him as CEO.
“In May, we held a companywide all hands call and sent an email afterwards that same day notifying the team that Dave had stepped down from day-today-management of 500,” the firm added in the statement. “Throughout the CEO transition Mr. McClure remained at 500 to fulfill his legal responsibilities to the funds as a General Partner. Due to the sensitivity of personnel issues and the privacy of all involved, the investigation was kept confidential.”
Some backers had indicated they would seek to withdraw their investments from 500 Startups. “We’ll see if it’s possible to get $ back,” wrote Mitch Kapor, co-founder of the Kapor Center for Social Impact, in a tweet on Friday. Another 500 backer, Hunter Walk, tweeted that he would donate any gains from his investment in 500’s first fund to nonprofits that help women in technology.
Another venture firm rocked by scandal recently is Binary Capital LLC. Co-Founder Justin Caldbeck resigned and apologized in late June after The Information detailed his sexual advances to women. It sparked calls for a technology industry code of conduct for VCs and entrepreneurs.
“The events of 2017 in the tech ecosystem depict a sector gone deeply awry. This is not just a case of a few bad actors,” Freada Kapor Klein and Mitch Kapor wrote in a statement Monday. “This is not something that is fixable with a pledge or a new policy. This is a culture that has been allowed to fester and to rot by enablers who refused to intervene when they witnessed inexcusable behavior or went to great lengths to avoid seeing it.”
In addition to its VC funds, 500 Startups runs one of the most highly regarded incubators for younger companies in Silicon Valley. Some of its graduates are Credit Karma Inc., Twilio Inc. and Udemy Inc. It has branches in several cities around the world.