"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."<p>Here's my outsider's guess: Dave was almost certainly a Key Person in 500's Limited Partnership Agreement. When a Key Person leaves, for whatever reason, that triggers a Suspension Event and the start of the Suspension Period. During the suspension period, the LPs are not required to contribute capital except for certain things (e.g. management fees, follow-ons). The LP's (some threshold or some combination of them like the LP advisory committee) then have 60-90 days to vote whether or not to continue with the fund.<p>500 would already have called down some capital so that meant they could make a few investments but otherwise, during the suspension period they likely couldn't make any new ones. Since then they got their LPs on board with the idea of continuing without Dave and now can fulfill all their obligations. That would make sense to me because 500 as an institution is much more than just one man.
My company just finished this batch. 500 was upfront that funding would not happen until at least 2 months after the batch starts. My impression is that communication has been weak after Dave leaving and that has allowed room for speculation. Personally, 500 has been good to us.
I participated in an accelerator run by a large corporate VC. They were supposed to give part of the cash up front (for common stock) and part after (in exchange for a note). During the initial negotiation, they offered to let me take it all up front for common stock. Because we had plenty of cash on hand, and because I wanted to use the post-program note to kick start a funding round, I said I'd just do the regular deal.<p>When I asked them about the note after the program ended, they said they thought I didn't want all the cash and so they wouldn't give it to me. Years later, and I've only just now gotten them to give the promised funding. I was shocked that they would behave this way considering the damage it can do to their reputation if word got out.
I've had a bad feeling about Dave McClure and 500 Startups since their Geeks on a Plane trip to India.<p>I was living in India at the time with a few other American open-source engineers. I reached out to 500 Startups and GOAP several times about the trip and couldn't even get a response.<p>The whole premise of GOAP felt like a way for Dave McClure to travel to remote places with attractive women. I'll probably get heavily down-voted for this comment, but I think it's not very far away from the truth.
I wonder if the paperwork (eg. term sheet or whole contract) got signed before Dave McClure left and (some) LPs are holding back their money now. Is that a realistic scenario?
If they're out of money, they're out of money. Was it all just coming out of McClure's pocket? IANAL, but presumably a substantial failure to adhere to contract terms on 500's part will release the startups from their contract requirements?
Recently 500 Startups started offering coworking space at their Mountain View location:<p><a href="http://go.500.co/coworking" rel="nofollow">http://go.500.co/coworking</a><p>Seems to me to suggest they're looking for alternative ways to raise money.
1) Huge screw up by Techcrunch for not catching this. Do they even produce quality journalism anymore?<p>2) Why is 500 Startups interviewing for the next accelerator period when they can't fund the previous one?