The credibility of Victoria’s government-owned funding vehicle LaunchVic has taken a huge hit in the wake of the 500 Startups scandal.
Its response to revelations of 500 Startups co-founder Dave McClure’s inappropriate behaviour toward multiple women has been inconsistent and confusing. It has been incoherent.
LaunchVic and its shareholder minister Philip Dalidakis have put diversity – and specifically gender diversity – at the heart of its startup and innovation support strategies for the state. Diversity is a core cultural trait that Melbourne and Victoria seeks to project to the world.
And so surely it is worth asking the question: Why all the ethical/policy gymnastics around making sure the 500 Startups relationships remains intact?
Why not simply reassign the $2.9 million that had been committed to 500 Startups to some other worthy part of the ecosystem where it can do some good?
Surely there must be complicating issues that have not been made public? Because at face value, the Victorian government should have dropped 500 Startups like a hot rock from the moment it found the company had deceived it in relation to Mr McClure having been stood down from running the firm months before.
Really, it is weird. We’re waiting for the other shoe to drop. Why not give this taxpayer funded grant to a less fraught, less deceptive recipient? Why not give 100 Australian startups $29,000 each, if merely giving money away is the objective?
There are really two issues here. The first is about the sexual harassment and the way that 500 Startups dealt with it.
The partners in Canada – the investors – have drawn a line in relation to their continued relationship with 500 Startups because of the Dave McClure sexual harassment issue. They have shut down a fund rather than be associated.
In Melbourne it is more complex. Even leaving aside the sexual harassment stigma, there is the issue of deception. LaunchVic and even the local 500 Startups chief were blindsided.
Dave McClure was brought to Australia by 500 Startups as a tech industry hero just days before the sexual harassment scandal blew up – even though he had apparently been stood aside from the day to day operations of the company.
McClure was allowed to share the stage with the minister, with the LaunchVic and 500 Melbourne leadership team, even though he was under a huge cloud internally, and – to hear 500 Startups co-founder Christine Tsai tell it – no longer involved in the day to day of the company.
Except the launch new business forays in Australia that attracted the biggest ever grant from an Australian government to an accelerator.
Unlike the response of the Canadian investors who shut down a fund rather than be associated with the company, the Victorian government has gone the other way.
It has doubled down its backing of 500 Startups, giving it an additional role in addressing sexual harassment issues in the ecosystem. It came to this clear view of the future in the space of one week.
Clearly there are issues at LaunchVic that are worth exploring, because it is such unusual behaviour.
For anyone that has not followed the huge drama of the 500 Startups entre into Melbourne, there is background here and here.
We know that the LaunchVic board has been without a chairman for five months, since the departure of Ahmed Fahour in February. It is not clear why it has not appointed another chairperson.
We also know that more than half of the LaunchVic board has resigned in the past 12 months. The LaunchVic website doesn’t list the members of the board – which in transparency terms is odd for a government-owned organisation – but ASIC will tell you that it is shrinking fast.
Barely 15 months after the LaunchVic launch, only three of the original board members remained in place. (It is probably worth noting too that LaunchVic is on its second CEO – the first, former public servant Pradeep Philip resigned after just eight months.)
Enquiries to LaunchVic and the minister’s office yielded some information. When Ahmed Fahour resigned as chairman, “the Department took the opportunity to do a review of the board structure.”
“Upon completion of this review, it was recommended that the board be reduced in size and some members of the board took this chance to pursue other opportunities.” It doesn’t say why a review of the board was necessary so soon after the organisation launched, or why it does not publish the composition of its board on its website.
For the record, the current LaunchVic board consists of (this will save you $38 in ASIC fees):
- Elana Rubin (deputy chair) – Director Group, Mirvac
- Anne Bennet – EGM Business Transformation Products & Mark NAB
- Tim Fawcett – Director Corporate and Government Affairs, Cisco Systems Australia
- Con Frantzeskos – CEO, Penso
- Catriona Larritt – Chief Commercial Officer, Jetstar
Anne Bennet and Catriona Larritt joined the board in December last year. They replaced Jane Martino and Dominique Gayle, who reseign last October.
The original LaunchVic board was (with their titles at the time of their appointment to the board):
- Ahmed Fahour, Managing Director and Group CEO, Australia Post (Chair)
- Elana Rubin, Director, Mirvac Group (Deputy Chair)
- Jo Burston, Managing Director, Job Capital
- Tim Fawcett, Director Corporate and Government Affairs, Cisco Systems Australia
- Dominique Fisher, Executive Chair and Managing Director, CareerLounge Pty Ltd
- Con Frantzeskos, CEO, PENSO
- Phillip Kingston, Managing Director, Trimantium Capital
- Jane Martino, Head of Social Segment, ANZ Bank
- Rachael Neumann, Managing Director Australia, Eventbrite
- Kee Wong, Managing Director, e-Centric Innovations
- Susan Wu, Head, Stripe Australia and New Zealand
Former board member Rachael Neumann resigned from LaunchVic on May 5, before resurfacing some weeks later at the helm of the 500 Startups’ Australian operation just prior to its formal launch.
In the seven days that followed the Dave McClure revelations, LaunchVic issued no less than four media statements. This is excluding the Twitter statements from Philip Dalidakis.
The first statement on July 1 expressed shock and disappointment and restated LaunchVic commitment to diversity and inclusion. It said the organisation was seeking a response from 500 Startups.
The second statement on July 3 “put 500 Startups on notice” but said “Dave McClure was a figurehead” and that ultimately it believed the 500 Melbourne operation could deliver against its contract.
The third statement on July 5 said LaunchVic stood by its second statement (presumably meaning 500 Startups was still on notice) but noted that Dave McClure had “been removed” from the organisation and that LaunchVic was “carefully considering options … to affect real change.”
The fourth statement on July 8 recommitted LaunchVic to the 500 Startups relationship, albeit with the program postponed to an unspecified date in future.
This final statement in which LaunchVic “confirmed its belief in 500 Startups” was issued on a Saturday morning. The organisation’s CEO Kate Cornick had given a single interview to a friendly reporter for a behind-a-paywall piece, but has not been available to other media on this issue.
This may seem obvious to many, but it is probably worth pointing out nonetheless. If you are a government organisation and you’re putting out a statement on a Saturday morning during the footy season (or any season really), you’re probably doing something that stinks.
LaunchVic says it has postponed the 500 Melbourne program until some unspecified time in future. This is pending 500 Startups “delivery of a remedial plan” to address sexual harassment in the ecosystem.
Which is a bit of a lol and rofl really. 500 Melbourne is still actively seeking applications to the program, which its website says will start in October.
At a time when investors in Canada are holding their nose, Melbourne is keeping its chequebook open.
And here’s where the bonfire of the vanities just gets even nuttier. Canada – those crazy Canucks who we love – managed to call their expensive brand import “500 Canada”. Not “500 British Columbia” or “500 Vancouver” or “500 Whistler.”
In Australia, it’s all about the dumb-arsed city rivalry that literally NO-ONE cares about except state politicians (and companies that want to milk them.)
How very hilarious that the joke is on us.
Do you know more? Contact James Riley via Email.