Ellie Cachette told Bloomberg that on that June night she was in California, and too ill to fly back to her party. She didn’t mention an unavoidable meeting, but denied that she has misled anyone. “I know some VCs are mad at me, haters,” she said in an email. “But we've done the best we could to mitigate things given all the unknowns and new territory. I can assure you that my fund is very real, just a little behind schedule.”
Silicon Valley is built on inventing-- both in the literal sense and figuratively, with entrepreneurs crafting narratives in service of building a business. Like a lot of founders, Ellie Cachette had many talents, including spinning a yarn. But as the party goers found out, it differed significantly from reality.
Cachette, 34, said she was raised by her dad, Terry Stogdell, in Martinez, California, a small town northeast of San Francisco. Back then, she was Desiree Stogdell. Terry Stogdell was a hemophiliac, and contracted HIV before Cachette was born. She spent her childhood helping to take care of him, and also hanging out at the startup where Stogdell worked, eBiocare.com Inc.
She would later say it was her dad’s startup and it was, in a sense, in that he was employed there. Speaking at one startup event, she claimed that he sold it for $60 million in 1989. But he didn’t own it. His job was as a community liaison, according to a former senior executive, who asked not to be named because the matter was private. The company was sold in 2001.
Stogdell died in 2002, leaving Desiree, then 17, to fight for her inheritance, she has said—an indignity that stayed with her.
“I had high hopes of attending an Ivy League school,” she wrote in a blog post decades later. “I wasn't able to go to any of these schools because when my father passed away my junior year of high school my home life and school life was completely thrown on its head with court hearings, probate hearings and general chaos.”
It was around that time that she changed her name to Ellie Cachette, which means hiding place in French, in order to gain privacy from her father’s former girlfriend, who tried to claim Cachette’s inheritance, she said.
She attended Humboldt State University in California, and after graduating with a political science degree, took a series of jobs as a software engineer before, at age 25, she raised $300,000 in 2010 to launch Consumerbell, a startup aimed at helping companies manage product recalls.
Consumerbell was an early example of Cachette’s ability to hustle. She managed to impress well-known angel investor Esther Dyson, who invested in the startup. She later told Forbes magazine that getting Dyson to invest was the “crucial step to overcoming funding hurdles.”
But Consumerbell struggled to grow beyond a few desks in a co-working space. Like most startups, it folded a few years later when it ran out of money. Consumerbell also showed Cachette’s ruthless side. She persuaded a colleague and friend to move from Seattle to New York, only to fire her four months later, according to two former employees.
After the failure of Consumerbell, Cachette continued to network, swapping jobs and working as a blogger, event organizer, copywriter, and software developer. One of these roles led to conflict. In September 2016 a New York-based app for organizing parties called Partyteq filed a lawsuit accusing Cachette of charging $195,953 for developing their app, but only delivering a “few rudimentary mock ups.” Cachette settled the lawsuit in September 2018.
“She is one of the most self-assured people I know, which is great when you’re trying to hustle,” said Stephanie Haller, a former colleague at Consumerbell. “She is definitely a fake-it-until-you-make-it, but there is more overlap than she cares to admit.”
At a New Year’s Eve party she hosted in 2016, Cachette came up with the idea for what would become Cachette Capital, a $1 billion fund that would take European pension fund money and invest it in venture capital funds. She emailed Morgan, who said the idea could work.
Morgan, 73, was an early employee of Renaissance Technologies, the successful hedge fund. In 2004 he co-founded First Round Capital. Alongside Uber, the venture firm has backed Square and Warby Parker, burnishing Morgan’s reputation.
He’s an adviser to Tiger 21, a consultancy for high net worth individuals and the sort of place where people ask advice on whether to let their kids inherit $10 million or $100 million.
Cachette said she’s known Morgan since 2012, and once did some copywriting for First Round Capital. One friend said Cachette is extremely protective over access to him. Emails to Morgan about Cachette Capital are often answered by Ellie Cachette, according to people who have tried to reach him.
Those who have worked with Cachette said Morgan liked Cachette’s scrappy nature, and that he wanted to support her.
Cachette Capital launched in early 2017 in New York, with a strategy of convincing old pots of European money, such as pension funds and private wealth managers, to invest in venture funds picked by Ellie Cachette – for a fee.
European pension funds have about $4 trillion under management. Getting them to part with $1 billion seemed ambitious, especially as over the last five years, European pension funds have invested just $1.7 billion in the VC industry, according to data from Atomico, a London-based tech investor.
By May 2017, Cachette Capital had moved to The Hague, setting up in a co-working space at the collection of offices at the World Trade Center to be nearer her potential investors, specifically large Dutch pension funds. She started calling her venture a “$1 billion fund.”
By the middle 2018, Cachette Capital claimed to have signed commitments to invest in 14 funds for a total of $138 million, according to company documents. They included Primary Ventures, SoGal, Caerus Ventures, SOSV, Seedcamp, Female Founders Fund, Heartland Ventures, Human Ventures, Parade Ventures, Stride VC, Social Leverage, Elaia Partners, and two funds from Lakestar. Morgan played an important role in introducing some of these funds to Cachette Capital, according to people with direct knowledge of the talks, and an ongoing lawsuit.
Morgan didn’t just provide the introductions. He and Cachette met for lunches with potential investors in Switzerland and attended charity dinners together, according to photos on Facebook and people with knowledge of the meetings. Morgan even owns part of Cachette Capital itself, according to two people with knowledge of the investment.
During those early months, Ellie Cachette spoke at conferences and hosted VC networking events in the Netherlands like venture capital nights with snacks and startup founders.
But what many didn’t know was that Cachette Capital’s cash predominantly came from Morgan, according to four people familiar with the matter who asked not to be identified because matter was private. There were also a few other investors, mostly businessmen, including Wolfgang Nuyken, a former manager of a baking factory whose son worked as an intern for Cachette Capital. More recently, Sriram Krishnan, a Twitter executive who has worked at Snap and Facebook, invested $25,000 on a whim, after previously bumping into Cachette as venture capital events in San Francisco. Nuyken and Krishnan declined to comment.
So far, there were no Dutch pension funds or old pots of European money. This was soon to cause a problem.
Of the 14 venture capital funds that said they had signed commitments to receive money from Cachette, nine never received any, according to people with direct knowledge of the matter. Lakestar, one of the largest VC firms in Europe that has backed companies including Facebook and Spotify, has not received any capital from Cachette (two of its funds had received promises of investments). Neither has Heartland Ventures, SoGal, Caerus Ventures, Elaia Partners, SOSV, Social Leverage, and Parade Ventures, the people said.
Brad Svrluga, a partner at Primary Ventures, confirmed Cachette Capital is an investor, but declined to comment on the amount. One of the VC firms, the London-based Stride, declined to comment.
By the end of 2018, Cachette Capital had invested just $3.6 million total according to an internal company document. Almost all of that money had come from Morgan, the people said. Those that had received cash – Female Founders Fund and Human Ventures – name Morgan as an investor, not Cachette Capital.
Cachette Capital invested $1.3 million in 2018 in London-based early-stage investor Seedcamp, and said it would invest a total of $7.25 million. Seedcamp put out a celebratory press release naming Cachette Capital as an investor. But Cachette didn’t have the cash to keep investing, and forfeited the $1.3 million because it couldn’t meet its obligations. In this case, the money was also entirely Morgan’s, according to one former employee.
When raising capital, venture funds run the risk of a cascade effect: if one investor bails out, others often follow. SoGal, a New York-based female-led venture capital firm, signed a $10 million capital commitment with Cachette Capital due in April 2018, according to a person with direct knowledge of the talks. By June, SoGal had received just $1 – in the form of a wire transfer test. SoGal’s directors sent an email to Morgan asking where the cash was. Within 10 minutes, Cachette had replied, threatening to blacklist SoGal from the venture fund industry, and refused to pay any more money, the person said.
After Cachette Capital backed out, SoGal’s other co-anchor investors also pulled $20 million of committed capital. Although SoGal eventually raised a $15 million, it added months to their fund raising process.
Despite Morgan’s backing, Cachette Capital was spending money it didn’t have, according to a pair of court filings in California and New York. Specifically, the firm racked up hundreds of thousands of dollars on the credit cards of friends and colleagues.
In May 2018, Cachette Capital hired Brendan Goldrick, a former Citigroup associate, in its Oakland office to help with the operations of the fund. Cachette told people in the Netherlands that Oakland was home to the back office of the fund. In reality, it was just Goldrick, sitting at a single desk in an office next door to a 90’s-themed tourist shop.
Weeks passed, and then months—and Goldrick was never paid, he alleged in a lawsuit filed later in Alameda County, California, that names Morgan and Cachette among eight different defendants. He started using his $30,000 bonus from his previous job to cover work expenses, hoping he would be paid back. He said Cachette told him that the firm had “liquidity issues.” He said her next excuse, offered in late June, involved plans by Cachette Capital to dissolve its New York office and set up in California. Cachette told Goldrick to set up a payroll account in California and await payment. By October, after repeated complaints over his lack of payment, Goldrick said he’d have to leave Cachette Capital. Cachette cut off his emails and demanded Goldrick return his company laptop and phone. Over email, she accused him of “larceny and extortion.” In November, Cachette fired Goldrick by text.
Goldrick alleges he spent over $100,000 of his own money, hadn’t gotten paid, and now was being accused of a crime. In July he sued. In response to the lawsuit, Cachette Capital said that Goldrick was a contractor, not an employee. Goldrick declined to comment, citing the ongoing lawsuit.
Daniel Lieberman, founder of web hosting company BitPusher LLC., said he was happy to help Cachette in early 2018 when he heard she asked for help setting up her new fund. An old friend, he gave her $75,000 in credit to help set up Cachette Capital, via an American Express card. Lieberman also offered to help the new fund with its IT setup. Getting help to set up a small fund is not unusual. But six months later Lieberman realized how much she’d spent on the card—$170,000 in expenses—and he cut it off, according to a court filing. In August, a New York County Court ruled that Cachette Capital should repay BitPusher $216,274. Lieberman declined to comment.
Ellie Cachette has her defenders. Speaking on condition of anonymity, because the situation has become so fraught, they say that, if she were a man, nobody would second-guess raising a $1 billion fund using grit, hustle, and the name of an esteemed industry veteran. But Cachette, over a number of phone calls and email exchanges with Bloomberg News, blamed the very people she wanted to invest in.
“VCs are very sloppy,” said Cachette. “They don’t care, they just want their money.”
Cachette attributed the firm’s failures to VCs and her employees. She said they didn’t understand how long it takes to meet the due diligence requirements of European investors.
Adressing the dispute with the Oakland employee, Brendan Goldrick, Cachette replied with a flurry of emails accusing him of partying too much, accompanied with photos of Goldrick at his desk at work, at a company dinner, and holding a bottle of vodka at a Halloween party.
"Ms. Cachette can't fight this lawsuit on the facts, so she is retaliating by levelling false allegations at Mr. Goldrick to damage his reputation,” said Rebecca Peterson-Fisher, a lawyer at The Liu Law Firm representing Goldrick. “Mr. Goldrick worked for CCM, he was not paid, and when he demanded his salary, he was fired. We're confident that a jury will see through Ms. Cachette's smoke and mirrors."
“My friends at the State Department are looking into this,” Cachette said in one email. “We will find out everything about him.”
When asked who the Dutch investors were, Cachette said the fund is in talks with pension-fund manager APG Asset Management NV, fellow pension fund PGGM, and banking group ING Group NV. The pension fund clients will make up $250 million of Cachette Capital, while ING is in talks to sell the fund via its private wealth arm, Cachette said.
In a follow-up call several weeks later, Cachette said that she was in talks with a number of banks to sell her fund to wealthy clients, and said she might have misspoke about ING.
A spokesman from APG said they are not investing in Cachette Capital. A spokesman for PGGM said the fund doesn’t invest directly in venture capital funds. ING declined to comment.
“Everyone has been on my ass on this fund,” Ellie Cachette said, adding that $1 billion remains her target, but in the meantime she was going to close a first fund at $100 million in the next few weeks.
Cachette said that her fund has multiple investors and said although Morgan may have funded the investment in Seedcamp, there were lots of other bills to pay that came out of her own pocket. The bumpy road to building her firm was filled with misunderstandings, greedy venture capitalists, and European red tape. Later, she emailed: “I think we are one of the most friendly and transparent fund of funds out there.”
--With assistance from Sarah McBride and Kartikay Mehrotra.
To contact the author of this story: Giles Turner in London at gturner35@bloomberg.net
To contact the editor responsible for this story: Emily Biuso at ebiuso@bloomberg.net
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