Investor Stacy Chang says promises made to her by Thrasio co-founder and CEO Carlos Cashman to become a partner in a new venture capital firm failed to materialize after she quit as chief of Cabinet at Peter Thiel’s Founders Fund.

In December, Stacy Chang landed in New York to kick off meetings with potential investors for the new venture capital firm she had recently joined, Arrowside Capital. A few weeks prior, Chang was chief of staff at Founders Fund, the elite venture capital firm founded by billionaire Peter Thiel. But she left that job for the chance to work as an investment partner with Carlos Cashman, co-founder and CEO of Thrasio, a hot consumer products startup valued at more than $5 billion.

Upon landing, Chang learned that Cashman had changed his mind about raising funds from outside investors and no longer needed his services, according to a lawsuit Chang filed Tuesday in federal court in San Francisco. . She alleges that after she was fired by Cashman, she found herself without pay for six months of work, including interest earned on investments made during that time, and could not even get reimbursement for subscriptions to office tools, including Slack and Zoom. Chang is seeking damages for missed back wages, unreimbursed expenses and unearned accrued interest she says she gave up when she left Founders Fund, a total the lawsuit amounts to more than $10 million.

Cashman did not respond to phone and email requests for comment, and Chang declined to comment through a legal representative. Founders Fund declined to comment.

Chang met Cashman through a mutual contact, Thomas Copeman, a former entrepreneur and one of Thrasio’s early backers. The three notes traded on startup opportunities through 2020 and through 2021, according to the lawsuit, until May Copeman informed Chang that Cashman planned to provide $10 million to serve as an anchor sponsor in a new venture capital fund led by Copeman. Chang showed up to both in June and was promised a partner role with the firm, called Arrowside Capital, that summer, according to his lawsuit. Over the next few months, she visited them in Boston for business meetings, researched and corresponded with startups and investors from an Arrowside email, and participated as the group backed 15 startups, including three companies bought by Chang.

But while Chang did much of the arduous work of setting up a venture capital firm — setting up deal flow tracking and providing weekly summaries of investment activity, attending meetings, and writing notes to startups that Arrowside was passing on — it did not have a formal offer letter or written contract at this point, the lawsuit admits. This was not cause for undue concern, argue Chang’s attorneys, as Arrowside had not yet been formally incorporated; until he was ready to start fundraising, she wouldn’t need to quit her day job at Founders Fund. Still, Cashman approved documents for a 2022 budget for Arrowside that detailed she would receive a salary of $225,000, according to the lawsuit. More importantly, the budget detailed the breakdown of interest carried for the company’s investors: 40% for Copeman and 25% each for Cashman and Chang, plus 5% for another planned investor, Scott Briggs, and 5% open for future hires.

In mid-November, Chang resigned from the Founders Fund with Copeman’s encouragement, she claims; she left at the end of the month. Then, the day before Chang’s planned December trip to the East Coast to kick off fundraising efforts, Copeman called her to let her know that Cashman wanted her to take a $25,000 pay cut, according to his pursuit. The next day, Copeman told him that Cashman planned to move forward without raising any venture capital funds at all, he said. Soon, Copeman offered a settlement of one month’s salary and interest on the three investments she had personally purchased, which Chang’s lawsuit says she declined. A few days later, on December 16, Chang spoke to Cashman directly via Zoom. Cashman reportedly apologized for Copeman’s handling of the situation and promised to compensate Chang more fairly, according to the lawsuit. But Chang’s attempts to follow through on those promises were diverted by Cashman to Copeman, according to the suit, who never made any “genuine offer” of compensation.

Like Cashman, Copeman did not immediately respond to emails and a call seeking comment.

Arrowside Capital’s current situation is difficult to assess. According to the lawsuit, Arrowside’s website went public on January 28, including the biographies of three investors: Cashman, Copeman and a third investor, Tucker Walsh. Screenshots provided at Forbes corroborate this story. Later, much of the functionality of the website was removed, including any mention of people involved with the business. In its place was a tagline – “the arrow of change” – and a message to “stay tuned for the upcoming launch of our website”.

Since the lawsuit was filed on Tuesday, that website has been updated to list Walsh as founder, managing partner and CIO. Another person, Andrew Winton, was listed as chief operating officer. Thursday evening, after Forbes had contacted everyone named by the website for comment, the site reverted to its “stay tuned” status, with no names associated.

On this site and on Arrowside’s LinkedIn profile, only Walsh is credited as a founder – not Cashman or Copeman. On his own LinkedIn and Twitter profile pages, Boston-based Walsh, who was previously a portfolio manager at investment manager Polen Capital, calls himself only managing partner and CIO. In a January 31 article by the publication Citywire Selector, a Polen spokesperson said Walsh left “for a family office role.” Walsh is also the authorized person named on a Form D filed with the Securities and Exchange Commission on March 7. According to this depositArrowSide Fund, designated as a hedge fund and not a venture capital fund, recently raised $22.15 million.

In a written statement, Walsh said, “I am the Managing Partner of Arrowside Capital LLC. The lawsuit you mention has nothing to do with Arrowside Capital LLC, no affiliation. No other comments.

Neither Cashman nor Copeman mention Arrowside in their biographies or public profiles. In a March 14 Press release for a new syndicate of e-commerce investors run by The Fortia Group, Copeman is listed as a participant and investor at Nomadic Capital Management, his pre-Arrowside company.

It’s possible that the largesse Cashman once relied on never materialized. While Thrasio was doing raise $1 billion in October as expected, the company’s co-founder – who had promised, according to the lawsuit, to anchor the new company by selling part of his shares – may have suddenly found himself on shaky ground. That same month, CNBC reported that Thrasio had scrapped plans to go public through a Special Purpose Acquisition Vehicle, or SPAC, amid an executive turnover that included Cashman co-founder and co-CEO Josh Silberstein and his chief financial officer. That left Cashman, long a behind-the-scenes leader at aggregator Amazon, with a new mission as sole CEO.

None of this will be much comfort to Chang, who according to the lawsuit has yet to see a dollar to repay the desktop software licenses she took out for Arrowside, let alone regain a foothold in venture capital. And that’s a far cry from how Cashman would have thought about his future in November, when he emailed a startup founder, according to the lawsuit: “Please meet Stacy and Tom, they direct my investment brain. : )”

About The Author

Related Posts