Cowboy Ventures, the now-10-year-old, Bay Area-based seed-stage targeted fund based by famend investor Aileen Lee, has closed on two new funds totaling $260 million in capital commitments. The outfit garnered $140 million in commitments for its fourth flagship fund and one other $120 million for its first opportunity-type fund (its “Mustang Fund”).
The quantity is greater than all of the capital that the outfit has raised across its earlier funds, which have been sized at $40 million, $60 million and $95 million, respectively. Then once more, the crew has grown through the years from being a one-person agency to an outfit with an investor crew, including fintech specialist Jill Williams, who Lee recruited from Anthemis, and Amanda Robson, who was pulled out of Norwest Venture Partners, the place she labored with quite a few enterprise software program corporations, including some targeted on AI and robotics. (Longtime Silicon Valley legal professional Ted Wang can be carefully related with the fund as a “board companion” and advises greater than a dozen of its portfolio corporations.)
It’s straightforward to understand why LPs dedicated extra capital to Cowboy, even in a market that appears to be actively shrinking given broader market turmoil.
First and foremost are its numbers, which look good, specific given the dimensions of its earlier funds. Cowboy was among the many first traders in Guild Education, for instance, an on-line schooling firm that’s targeted on upskilling frontline staff, and was valued at $4.4 billion when it closed its most up-to-date spherical of funding in June of final yr. Cowboy can be a seed investor within the safety and compliance automation platform Drata, assigned a $2 billion valuation in December when it raised $200 million in Series C funding.
In dialog with Lee, Williams and Robson late final week, Lee famous that Cowboy thinks of itself as a generalist agency, however that 70% of its most up-to-date fund was funneled into enterprise startups and 30% into shopper startups, given Cowboy has additionally loved success with the latter. (Most notably, considered one of its first checks went to Dollar Shave Club, the lads’s grooming firm acquired by Unilever in 2016 for a reported $1 billion.)
Others of the agency’s bets embody Vic.ai, a startup that’s automating accounting processes and simply closed a $52 million Series C spherical in December; Homebase, a platform for small to mid-size companies that helps with scheduling, payroll, money advances and HR stuff and has raised roughly $100 million from traders so far; and SVT Robotics, whose software program organizes robots in warehouses and factories (it closed $25 million in Series A funding in late 2021).
Lee additionally stated that Cowboy prefers to spend money on “pre-product” startups (about 70% of its first checks fall into this class) and that, as a result of from the outset it has cultivated a various neighborhood of founders, roughly half of its portfolio corporations have been both based or co-founded by a lady and roughly one-third of them have been based or co-founded by an individual of shade.
While Cowboy may be very a lot targeted on the underside line, says Lee, it additionally goals to “have a optimistic affect on the neighborhood round us. We’re not a social affect fund, however we get off the bed on daily basis a bit bit excited to show which you can be nice at this job and in addition be a considerate human being on the identical time.”
Indeed, the three companions stated the thought is to maintain doing what Cowboy has been doing all alongside, with the added twist of working an opportunity fund to again its breakout winners. Though LPs have stated they’re much less and fewer captivated with such autos — it complicates their very own portfolio development when early-stage companies additionally function later-stage swimming pools of capital — Williams stated Cowboy’s traders didn’t blink on the concept. It was time, she steered.
“We’ve been writing follow-on checks to a whole lot of our corporations simply both by way of [special purpose vehicles] or by way of our present funds, however not essentially within the verify dimension that we’d have needed and even [given the room] our founders have been giving us,” she stated final week. “Instead of leaving capital on the desk of doing SPVs, this offers us the opportunity to pursue precisely the identical technique however double down on our winners, and our LPs actually see this as an extension of that technique.”
Robson additionally steered that the crew is worked up to have recent capital to place to work after two years of froth. “We have seen a whole lot of incremental concepts, and this was very true within the second half of final yr. But with budgets constrained and the bar greater relating to the worth it’s important to present [your customers],” she stated, “we predict we’re going to see much better ideation as this yr goes on and the mud settles on what the new regular for the setting is.”