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500 Startups, still recovering from scandal, is giving some control to an Abu Dhabi investment firm

It’s the VC firm’s most meaningful governance change since its CEO resigned from the role last year.

500 Startups CEO Christine Tsai
500 Startups CEO Christine Tsai
http://christinetsai.co/

The accelerator program 500 Startups was roiled by drama last year after the ouster of its CEO, Dave McClure, under allegations of sexual harassment.

Now 500 Startups is making its most meaningful governance change since McClure resigned from the role last year. In an unusual deal, the firm said it would sell some equity in its parent company, called Mothership, to the Abu Dhabi Financial Group, which will now help oversee 500 Startups operations alongside McClure’s successor, Christine Tsai.

Deal terms weren’t disclosed beyond the investment being “significant.” Another sign that it’s not small: ADFG is taking one of the two seats on the board — this is the first time 500 Startups is accepting outside capital into its parent company, it said.

Mothership was previously owned solely by company leadership. McClure still holds some stake in it, the company said, though it’s possible he sold some of his stake to ADFG in this deal.

500 Startups does, of course, have investors — or limited partners — in the individual funds that it runs. Those limited partners essentially “buy” an ownership stake in a fund. This is a rare instance in which a limited partner is “buying” a stake in the fund’s parent company, which in this case includes not just the individual funds but also non-deal programming like strategic partnerships and investor education courses.

500 is not a typical venture capital firm. It has a staff of about 100, far bigger than most VC firms, in part to oversee its expansive network of “micro-funds” that invest in specific regions.

ADFG is the latest big-money foreign investor to try and increase its footprint in Silicon Valley startups. Sovereign wealth funds like Abu Dhabi’s Mubadala and Singapore’s Temasek have recently opened offices in San Francisco to help their countries gain better access to young private companies. ADFG hasn’t done as many U.S. tech deals, but has more than $6 billion under management.

ADFG is now expected to serve as a large investor in future 500 Startups funds — which should make the eight-year-old accelerator more durable. The accelerator has long thought about taking on cash from an outside investor into its parent company, Tsai told Recode, in order to more aggressively scale its programming.

Tsai said the decision to take on ADFG’s investment was unrelated to the fallout from McClure’s ouster. She said she had been speaking with strategic investors like ADFG about a deal since before the sexual harassment scandal hit the headlines. And she claimed that limited partners remained excited about 500 Startups, and that the deal was not motivated by a need for replacement cash.

“It’s not something that’s a reaction to Dave per se or anything like that,” Tsai said. “We’ve had a lot of support from our LPs.”

This article originally appeared on Recode.net.