Early Life and Upbringing
Dave McClure was born in the late 1960s in West Virginia, although specific details about his early life remain scarce. He grew up in West Virginia before heading off to college at Johns Hopkins University in Baltimore, Maryland where he studied engineering and computer science.
McClure graduated from Johns Hopkins in 1988 with a Bachelor‘s degree in Applied Mathematics and Computer Science. Shortly after finishing his studies, McClure decided to try his luck in the blossoming world of technology startups out west. He moved to Silicon Valley where he took a job as a software consultant.
Consulting Work and Founding Aslan Computing
From 1989 to 1994, McClure worked as an independent software development consultant. He helped large companies like Microsoft and Intel build database systems and client-server applications.
In 1994, McClure decided he was ready to run his own show and founded a technology consulting firm called Aslan Computing. McClure built Aslan into a substantial operation before selling it to Servinet in 1998. He stayed on post-acquisition for another year managing Aslan as a business unit for Servinet until 1999 when he left to pursue other ventures.
Marketing Leader at PayPal: 2001-2004
In 2001, Dave McClure landed a job at the payments startup PayPal. Founded as Confinity in 1998, PayPal provided users an easy way to transfer money and make payments online. McClure came on board as the Director of Marketing.
McClure proved to be an innovative marketing leader at PayPal. He started the company‘s developer network program enabling outside developers to build extensions and improvements to PayPal’s platform and products.
PayPal CEO Peter Thiel credited McClure‘s efforts, saying:
"Dave was instrumental in making developers aware of our platform and the potential to transform payments."
In 2002, PayPal was acquired by eBay for $1.5 billion. McClure stayed on for another two years post-acquisition managing PayPal’s marketing initiatives until leaving the company in October 2004. His time at PayPal connected McClure to what would become known as the PayPal Mafia, an influential network of former PayPal executives and engineers turned startup founders and investors.
Angel Investing and 500 Hats: 2004-2008
Upon exiting PayPal in late 2004, McClure launched an angel investing operation called 500 Hats. It was a nod to the saying claiming that an entrepreneur needs to wear 500 different hats to build a successful startup. Through 500 Hats, McClure made seed investments in over 40 early-stage internet and technology companies over the next four years.
Some of McClure’s successful angel investments through 500 Hats included:
- Mint – Personal finance app later acquired by Intuit
- oDesk – Freelance services marketplace now called Upwork
- Jambool – Social gaming startup bought by Google
- SlideShare – Business presentation hosting site purchased by LinkedIn
McClure didn’t just provide startups cash. He also gave founders expert advice on marketing, product development, and company building from his own entrepreneurial experiences.
A Brief Stint at Simply Hired
In 2005, McClure also joined the job search engine Simply Hired as Director of Marketing for a little over a year. He helped establish Simply Hired‘s brand identity and forge key partnerships with companies like LinkedIn. McClure left Simply Hired after just 14 months in May 2006.
From Founders Fund to 500 Startups
In early 2008, McClure linked up with several former PayPal Mafia members turned prominent venture capitalists to join Founders Fund as a partner. The investment group had been launched in 2005 by former PayPal executives Peter Thiel, Ken Howery, and Luke Nosek.
During his two years at Founders Fund, McClure helped orchestrate more than 40 investments in early-stage startups. But by early 2010, he was itching to return to a more hands-on investor role. McClure left Founders Fund and partnered with Christine Tsai to launch a new seed-stage incubator and investment fund called 500 Startups.
500 Startups, or as it‘s commonly written, 500 Startups, focused specifically on providing pre-seed and seed funding to young internet, mobile, and software startups. Led by McClure and Tsai, 500 Startups soon grew into one of the most active early-stage investors around. Between 2010 and 2017 when McClure departed the firm, 500 Startups invested in over 2,500 companies.
Some of 500 Startup‘s more notable investments under McClure‘s leadership included:
- Twilio (cloud communications platform)
- Canva (graphic design tool)
- Grab (ridesharing startup in Southeast Asia)
- GitLab (DevOps platform)
- Udemy (online education marketplace)
McClure‘s success at 500 Startups cemented his status as one of the most influential angel and seed investors of the early 2010s. 500 Startups helped launch the careers of numerous founders and funded the early growth of many startups that went on to become unicorns and multi-billion dollar companies.
The AngelGate Price Collusion Scandal
In September 2010, McClure found himself swept up in a controversy that came to be known as AngelGate. A number of prominent angel investors including McClure met for dinner in San Francisco that summer. TechCrunch founder Michael Arrington got wind of the dinner and accused the investors of improperly colluding to try and fix prices for new startup funding rounds.
The prevailing ethos of angel investing then was for new startups to raise capital at increasingly higher valuations from larger VC funds as they progressed. Arrington alleged McClure and the other angels aimed to artificially cap valuations to maximize their own returns. The accusation sparked an FBI investigation, although in the end no charges came from the AngelGate allegations.
Sexual Harassment Allegations and #MovingForward at 500 Startups
In mid-2017, multiple women came forward sharing allegations of sexual harassment by McClure. The accusations included inappropriate and vulgar comments as well as unwanted advances. Facing rising criticism and calls for accountability from within 500 Startups‘ own portfolio community, McClure resigned from 500 Startups in June 2017.
500 Startups commissioned an independent investigation into the sexual harassment claims which found evidence to corroborate allegations of inappropriate behavior by McClure. The company that McClure co-founded quickly moved to implement remedial measures under the umbrella of a new #MovingForward initiative led by CEO Christine Tsai. 500 Startups vowed to improve internal policies and industry practices around harassment issues.
Meanwhile in 2019, McClure started a new investment company called Practical Venture Capital. By 2020, he had $110 million under management, including a $10 million fund specifically aimed at making acquisitions of equity stakes in 500 Startups portfolio companies.
Legacy as an Influential Seed Investor
For all his flaws that led to his ignominious fall from 500 Startups, McClure leaves behind an impressive track record as a founder and investor. Early on at PayPal then through 500 Hats and later at 500 Startups itself, McClure displayed a sharp eye for promising startups in need of a first infusion of capital.
McClure shaped emerging models like rapid prototyping and customer development. He…