Venture: Mike Cagney's New Startup Attracts Investors Despite Sex Scandal
Since the end of World War II, the number of women in the workforce has increased every year, currently accounting for 47 percent of the workforce in the U.S. Even though more women are climbing the corporate ladder in some of the top companies in the world, sexual harassment and assault is very much a reality for many women and some men, particularly by male coworkers who occupy powerful positions such as CEO and Chairman in a company.
Mike Cagney, co-founder and former CEO of online personal finance company Social Finance, Inc., or “SoFi," is currently under fire for allegations of sexual harassment. Cagney resigned from his post as CEO of SoFi due to an investigation conducted by the SoFi board that found proof of him having an extramarital affair with an employee. Cagney’s resignation came shortly after a lawsuit that was filed by former SoFi employee, Brandon Charles, who stated that he had personally witnessed female employees being sexually harassed by Cagney at SoFi. After the lawsuit had been filed, Cagney sent out a letter to SoFi employees. He stated, "The combination of HR-related litigation and negative press have become a distraction from the company’s core mission."
A female employee at SoFi who says she was sexually harassed by Cagney was an executive assistant by the name of Laura Munoz. As she was describing the “frat-like” environment of SoFi, she also recalled text messages sent from Cagney at night, especially those that are sexually explicit, and that she was being paid about $75,000 to leave the company.
Mike Cagney’s actions in the sex scandal of SoFi had also affected the company’s chances of becoming a bank. SoFi submitted an application to become a bank of its own and its chances of becoming a bank were already slim before the allegations surrounding Cagney’s sexual misconduct had been revealed.
Although no longer the CEO of Social Finance, Inc., Cagney had recently established a startup called Figure that has already raised $50 million. The funding round was being led by DCM Ventures and Ribbit Capital, alongside support and participation coming from Mithril Capital Management.
Cagney’s new startup Figure had also been assisted by two venture capitalists who had invested $17 million into it, even as those venture capitalists were still very aware of the sexual misconduct that was performed by Cagney at SoFi. The two venture capitalists that had invested the $17 million were DCM Ventures’ David Chao and Baseline Ventures’ Steve Anderson, both of them being former board members of SoFi.
As Cagney sets the foundation for his new startup, in which he is also the co-founder alongside his wife, June Ou, who was also SoFi’s chief technology officer, his plan for the startup was to raise $25 million and pitch to investors like PayPal co-founder Peter Thiel and the aforementioned Chao and Anderson, individuals who were also SoFi’s financial backers.
Figure was created as a lending startup that specializes in home equity funding with blockchain, which is a growing list of records linked to cryptography, being an important component of the startup’s business plan. As of July 27, 2018, the startup has now raised up to a total of $58 million.
SoFi, on the other hand, is moving on in the right direction as it hired Anthony Noto, who had recently served as the COO of Twitter since November 2016, as the newest CEO of SoFi. The company had also added two women onto its Board of Directors as well, Peggy Alford, Chief Financial Officer and Head of Operations at the Chan Zuckerberg Initiative, and Magdalena Yesil, a prominent venture capitalist of tech companies such as Salesforce.
Just like Cagney, other prominent Silicon Valley entrepreneurs and investors such as former DJF investor Steve Jurvetson and former Binary Capitals investor Justin Caldbeck have also reignited their careers after resigning because of similar allegations of sexual misconducts at their former companies. Jurvetson is listed as the future founder of his new venture capital fund called Future Ventures whereas Caldbeck made a public appearance in which instructed male professionals on the dangers of the “bro culture” in the workplace and what he had learned from grappling with sexual harassment claims.
What is similar between these investors and Mike Cagney is that these men lost their positions of leadership due to the ever-growing influence of the #MeToo movement, which encourages women of all backgrounds to reveal the sexual harassment and assault they’d experienced in the past. The #MeToo movement expands to professional environments as women who are working (or have worked) in various industries, ranging from finance to music to technology, and had opened up to the public about abuses and the masochistic work culture that they’ve experienced.
The comments that were expressed by former SoFi executive assistant, Laura Munoz, and other female employees at SoFi about the actions of Mike Cagney when he was the company’s CEO can serve as evidence that even the offices of Silicon Valley companies can still enhance the atmosphere of sexual harassment and assault that makes women very uncomfortable to work in. Even if a company’s executives or founders had achieved a lot of success for the company throughout the years, those same individuals should still be removed from their positions if there is still enough evidence that proves them guilty of sexual misconduct in the office.