500 Startups, the U.S.-headquartered VC firm hit by scandal last year after co-founder Dave McClure resigned following allegations of sexual misconduct, has announced an unconventional deal that sees Abu Dhabi Financial Group (ADFG) take a stake in its parent company.
It is normal for VC firms to work closely with big corporates as LPs that supply money for their funds — the Middle East has proven to be fertile hunting ground for the likes of 500, Uber and Softbank — but direct investment in parents is not common in VC-land. ADFG has been an LP with 500 for some time and Christine Tsai, who heads the VC firm up, said there is “strong alignment on vision and complementary strengths” between the two.
Founded in 2011, ADFG claims to have $ 6 billion in assets under management via offices in the UAE, UK and Eastern Europe. The firm covers public markets, private markets, real estate and debt investments.
500 isn’t saying what size ADFG’s investment other than it will lead to “substantial capital” being injected into the firm to “accelerate the growth of our key initiatives, expand into new markets, and anchor future 500 funds.”
ADFG will also get a board seat at 500, Tsai confirmed.
Unlike most U.S. VCs, 500 has offices, accelerator programs and micro-funds across the world including Europe and Asia. In the aftermath of McClure’s scandal last year, the firm shuttered its Canada-based fund while a maiden Australia-based program was axed by partner LaunchVic, a $ 60 million entrepreneurship scheme backed by the government of Victoria, before it even started.