The interview below is part of a series from The McGuireWoods Emerging Manager Program featuring impressive emerging managers, as part of our ongoing commitment to the emerging manager community. The McGuireWoods Emerging Manager Program supports emerging managers throughout the most critical stages of a fund’s evolution with a differentiated and proprietary approach to connecting emerging managers with limited partners, providing intelligence on market terms and preferences, and advising emerging managers on all components of building a durable brand as an investor. To recommend an emerging manager for a future interview, email Jon Finger at [email protected].
Q: What led to the decision to raise your initial fund?
Wendi McGowan-Ellis: I was born and raised here in Dallas. From the mid-1990s to the mid-2000s, there was a fund called the Texas Women’s Venture Fund. Around 80 corporate leaders, entrepreneurs and high-net-worth women came together and raised a fund of around $20 million. My understanding is that they invested in about 10 companies and had seven successful exits over a decade.
Since the closing of that fund in the mid-2000s, there has not been any other women-led venture capital firm investing in women here in the North Texas area. During the pandemic, I did extensive internet research trying to learn everything I could about the fund. I knew it was a success when it was operating, but I struggled to find any information on it. I took one of the women who was involved in it out for breakfast, and she told me the story I just shared, including that the fund ceased operations in the mid-2000s.
During our conversation, she offered me two pieces of advice. Number one: It’s desperately needed for someone to create a new fund. Number two: If you want to do that, it’s going to be you on your own.
That conversation was the launching point for my firm, Cassandra Capital. After that discussion, I started talking to my attorney and accountant about how to pull something like this together.
Q: What do you think differentiates your fund from others?
WME: I do not have a venture capital background. I have an owner/operator/entrepreneurial background. I’m coming at this from the perspective of understanding what it’s like to be a female founder and all the things we need to do to get our businesses off the ground. Going for outside funding is typically not the first thing or even fifth thing we think of. That perspective makes Cassandra Capital different from most funds.
In addition, Cassandra Capital is not only a direct investment vehicle for women-led firms here in North Texas, but we are also a fund of funds. I am piggybacking on the success of four other women-led venture capital firms in the United States: The Artemis Fund, Chloe Capital, Halogen and Portfolia. Our Cass Cap Fund I is a $20 million fund, of which 80% will go across those four women-led firms and then $4 million will go into two to three women-led firms in the North Texas area for direct investment as a convertible note.
I’m also planning to deploy capital in stage gates. Once I raise $5 million, we’re going to deploy it. Once I raise the next $5 million to get to $10 million in total, we’ll deploy that $5 million. Same for when we reach $15 million and $20 million. This will keep the first checks from sitting on the sidelines until I raise the full $20 million for Cass Cap Fund I.
Q: How did you think about assembling your team?
WME: I have a lot of very strong women in in my life. My attorney is a woman. My accountant is a woman. A very good friend is a managing director at an oil and gas private equity firm here in Dallas. She’s on the fundraising side and has a strong investor relations background in the oil and gas industry. She’s been a friend and supporter for years.
My team is very lean. I’m a solo general partner. For everyone involved in Cassandra Capital, it’s sweat equity up to this point. I have a strong network here in Dallas and within the University of Texas at Austin, which is where my economics degree is from. I have lots of mentors, investment committee advisers and business associates from a variety of industries, many of which are 20- and 30-year-old relationships. These individuals are advising and helping me to not only pull this together but also serve as my due diligence and investment advisory committee once we start getting close to the initial raise of $5 million.
Q: What were the most important considerations for you when choosing LPs to pursue for partnership?
WME: I’m looking for LPs who understand women have not traditionally had access to capital and that I want to make a difference on that front. Let me be clear: This isn’t just a “woman show.” I will take a check from a man any day. I’m not limiting who my LPs are based on gender. This is a powerful thesis around wanting to make a difference in women’s businesses and have the understanding that women typically have stronger exits. They often exit faster, have more stable returns and deliver higher returns. I’m looking to get that story in front of anyone and everyone.
Q: What did you consider and prioritize when developing an investment strategy for your initial fund?
WME: The four women-led venture capital firms I identified earlier cover everything from seed stage to series G. They’re covering a variety of industries — from artificial intelligence and robotics to fintech and agtech. I believe the diversity across the portfolio I’ve built is quite impressive.
For the direct investments in the companies here in North Texas, I’m looking for those touching what I call “women’s proximity to problems.” These are things women typically think about, from both a consumer perspective and healthcare perspective, that men probably aren’t thinking about when they invest. I view this as a blue ocean for investment opportunity.
Q: Recognizing the complexities in raising a first-time fund, what are some teachable moments you have encountered along the way?
WME: The differences between how women and men look at investing. There’s an article on Medium by Jesse Draper that went viral. Jesse is a fourth-generation venture capitalist and the daughter of Tim Draper out in Silicon Valley. She wrote an article titled “Investing in Women Isn’t A F—ing Charity.” When I first started the conversation around my fund, the teachable moment for me was that I had to get very clear, very quickly in describing what I was trying to do. This is an investment opportunity. This is not a nonprofit to help female founders. There’s plenty of those out there, but Cassandra Capital is not one of them. Cassandra Capital is not a charity. I needed to be clear that I was creating this to make money and give others the opportunity to make money, but doing so by doing good and tapping into an undervalued and underrepresented market.
Q: What is the best piece of advice you were given about raising your first fund?
WME: Be patient, which is not my greatest virtue. This is a marathon, not a sprint.
About Wendi McGowan-Ellis
Wendi McGowan-Ellis is the founder, CEO and general partner of Cassandra Capital. She is a business founder with 25-plus years of intra- and entrepreneurial experience, business formation, launch, growth and management experience, including for LifestyleFrisco.com and Wendistry.com.
McGowan-Ellis has an extensive background in business startup, management, growth, strategy development, branding, marketing and digital advertising and strategy, e-commerce and media relations. She served as a management consultant to Fortune 10 firms, medium companies and over 100 small businesses.
McGowan-Ellis earned a B.A. in economics from The University of Texas at Austin.