500 Startups still owes money to its latest group of startups
Dave McClure. Photo by Steve Jennings/Getty Images
Startup accelerator 500 Startups, whose founder Dave McClure departed in July following multiple allegations of sexual harassment and assault, has not fully paid the companies that graduated most recently from its program, Axios has learned from multiple sources.
Accelerators invest in each startup they accept into their program, but 500 hasn't paid all the money that it owes to companies in the group that finished in October. According to sources, this isn't the first time that it's been late with payments—often stalling by telling companies that it's reviewing their paperwork or other due diligence—although this sounds like the most egregious case.
From a spokeswoman:
While we were completing legal documentation related to Dave McClure's resignation from 500, funding for certain companies was delayed. Since then, we have resumed fundraising, as well as funding our investment commitments. We have been regularly communicating with our companies regarding the status of their investment and expect to complete all outstanding investments in December.
Something in that statement doesn't add up. For starters, McClure stepped down months ago. Moreover, his resignation shouldn't delay a task as simple as wiring money (as 500 Startups sources have described it to Axios), thus raising questions about whether the organization actually had enough funds at the time.
According to one source, 500 Startups had called and deployed all the capital its investors had committed for its current fund by May. It's possible it received a small infusion in the following months, although a spokeswoman didn't respond to several follow-up messages from Axios to clarify.