Sources: Dave McClure is raising $10M to buy out some LPs of 500 Startups' first fund using his Practical Venture Capital firm, which is raising a $100M fund
Kia Kokalitcheva / Axios : Tweets: @axios Tweets: @axios : Dave McClure is raising $10 million for a special purpose vehicle to buy out some limited partners in the first fund of 500 Startups, the firm he founded and led until resigning in 2017 due to sexual harassment allegations, Axios has learned. https://www.axios.com/...
Context & Ripple Effects
Three years after McClure resigned as a general partner of 500 Startups following admissions of inappropriate behavior toward women, he is moving to reacquire exposure to the firm he founded — this time through Practical Venture Capital, a separate vehicle. The move lands on a fund whose fundraising was already strained: 500 Startups closed its third global fund at $85M, 15% below target in 2015, and the first-fund LPs now being courted have been locked in since the firm's early days.
The structure matters: a $10M special purpose vehicle to cash out select limited partners, sitting alongside a $100M fundraise for Practical Venture Capital itself. McClure is effectively using new capital to buy secondaries in his own legacy fund.
First-order effects
- Limited partners in 500 Startups' first fund gain a liquidity exit after roughly a decade of illiquidity, with McClure's SPV as the direct counterparty.
- Practical Venture Capital, not 500 Startups, becomes the vehicle through which McClure holds these positions — separating his post-2017 capital career from the firm he no longer runs.
Second-order effects
- LPs weighing the $100M Practical Venture Capital fund must diligence both the secondaries strategy and McClure's conduct history — the same on-the-record allegations documented in 2017 coverage that forced his exit from 500 Startups.
- 500 Startups' current leadership faces a governance question: a founder who resigned under harassment allegations reassembling ownership of the firm's earliest portfolio positions from the outside.
Third-order effects
- If the pattern holds, venture secondaries become the route by which departed founders re-enter asset management through new vehicles rather than their old firms — testing how far LP reputation screens extend to fund-level buyouts versus new management roles.
- The episode sharpens the LP-side question of whether misconduct-driven founder exits carry lasting capital-markets consequences, or whether time plus a new fund structure resets the relationship.
The trend: Venture secondaries are becoming the mechanism for departed founders to reacquire their own funds' positions through successor vehicles, with LP diligence on founder conduct as the gating factor.