Expressing disappointment at the closure of 500 Startups Canada, the New Brunswick Innovation Foundation is now working with the fund manager to see what can be done about its investment in the fund.

Earlier this year, NBIF said it would be a limited partner in the new fund, which was to be a Canadian offshoot of the Silicon Valley-based seed funding organization 500 Startups. However, the U.S. organization was engulfed in controversy this summer when several women said 500 Startups Founder Dave McClure had made inappropriate sexual advances on them. In the fallout, as first reported by Betakit, 500 Startups Canada announced that it would shut down and no longer raise funds. The fund will continue to manage its 38 investments.

“We’ve advanced a portion of our committed capital to the Canada Fund, and we are now working with the Fund Manager to investigate the options available to NBIF,” said NBIF President and Chief Executive Calvin Milbury in an email.

Though the innovation agency did not disclose how much it had committed to invest in 500 Startups Canada, Milbury said in a previous interview it was “nothing over the top.”

Innovacorp Invested $5.6M in 2016-17

NBIF had hoped to use its relationship with 500 Startups not only to increase funding in the region but also to broaden its network across North America.

“We were very disappointed to learn that the Canada fund was unable to reach an agreement to sever ties with the parent organization,” said Milbury on Thursday. “This is unfortunate as the Canada fund was playing an important role in seeding emerging, high growth companies across Canada. Seed equity is so critical for our startup ecosystem. It’s also frustrating as [500 Startups Canada Venture Partner] Sanjay Singhal has built a strong investment team who has already made many impressive investments.”

Atlantic Canadian links with 500 Startups are stronger than those with other Silicon Valley accelerators.

Fredericton-based WellTrack, which has developed online therapy for students with mental health issues, recently graduated from the 20th cohort of 500 Startups in Silicon Valley. And Halifax’s Swept, which makes software for janitorial customers, is now in the 21st cohort. In 2015, Moncton-based recruiting software maker Alongside went through the accelerator in 2015 and received funding from the parent organization.

All these companies received US$150,000 for a six per cent stake in their business.

Milbury added that NBIF is still open to backing VC funds when it makes strategic sense for NBIF and New Brunswick startups, though it is not considering any deals at the moment.

He said: “We do believe in the model and consider it our role to connect with VC funds outside the region and expose them to our startup community here in N.B. and across the region.”