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 had 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 intently related with the fund as a “board associate” and advises greater than a dozen of its portfolio corporations.)
It’s simple 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, explicit given the scale of its earlier funds. Cowboy was among the many first buyers 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 12 months. 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 client startups, given Cowboy has additionally loved success with the latter. (Most notably, one in all 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 embrace 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 buyers up to now; and SVT Robotics, whose software program organizes robots in warehouses and factories (it closed on $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 had been both based or cofounded by a girl and roughly one-third of them have been based or cofounded by an individual of colour. While Cowboy may be very a lot targeted on the underside line, says Lee, it additionally goals to “have a constructive affect on the neighborhood round us. We’re not a social affect fund, however we get off the bed every single day somewhat bit excited to show you can be nice at this job and likewise be a considerate human being on the identical time.”
Indeed, the three companions stated the concept is to maintain doing what it’s doing, with the added twist of working an opportunity fund to again its breakout winners. Though LPs have stated they’re much less and fewer obsessed with such autos — it complicates their very own portfolio development when early-stage corporations additionally function later-stage swimming pools of capital — Williams stated Cowboy’s buyers didn’t blink on the concept. It was time, she advised.
“We’ve been writing follow-on checks to a variety of our corporations simply both by [special purpose vehicles] or by our current funds, however not essentially within the test measurement that we’d have wished and even [given the room] our founders had been giving us,” she stated final week. “Instead of leaving capital on the desk of doing SPVs, this provides 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.”